Target: ₹270
CMP: ₹168.50
Ugro Capital has announced the acquisition of Profectus Capital in an all-cash deal, marking a strategic step towards strengthening its NBFC platform.
The acquisition will result in significant increase in AUM, with an immediate 29 per cent growth; further diversification and margin improvement by way of adding new high-yield products like school finance; synergy benefit of ₹100 crore through geographic and product alignment, especially in Secured LAP, Machinery Finance and Supply Chain Finance; Strengthened combined entity asset quality due to increasing share of the secured product mix (75 per cent secured); and efficient utilisation of capital.
Overall, the integration is expected to improve profitability and boost return ratios by 50–60 bps post-merger; the acquisition is targeted to be complete by end-Q2FY26. In our view, the recent capital raise and acquisition would prepare the company for its next phase and take it closer to its goal of 4 per cent ROA in the medium term.
To factor in the developments and capital raise, we adjusted our FY26-28 estimates and reiterate Buy, with an 8 per cent upward revision in our Mar-26E TP to ₹270 (implying FY27E P/B of 1.1x).