This Multibagger Small Cap Financial Services Stock Gets Buy Call, Brokerage See Robust 71% Gains

Ajcon Global in its report on Urgo Capital Limited has placed a buy call for a decent gain of up to 71% with a target price of Rs 276/share. UGRO Capital Limited is a Data Tech Lending platform, listed on NSE and BSE. Company has developed a superior underwriting framework GRO Score 2.0 (combines credit bureau and banking data into one model). The Company has evolved to a Data Tech Company within 3 years of Inception.

Stock Outlook & Returns

On NSE, Urgo Capital stock last traded at Rs 161.75/share, 3.26% up from its previous close. The stock recorded its 52-week high level at Rs 230.35 on 17 January 2022 and 52 week low level at Rs 119.95 on 17 May 2022, respectively. It has a market cap of Rs 1,141.30 crore. 

The stock in the past 1 week has fallen 5.16%, in 1 month it has fallen 7.94%, and in 3 months it has fallen 9.81%, respectively. The stock in 1 and 3 years has fallen 18.82% and 10.01%, respectively. The stock has given multibagger returns of 352.59% in 5 years.

Q2FY23 result analysis - AUM, Disbursement, Operating performance

1. The Company's AUM witnessed a YoY growth of 126 percent and QoQ growth of 20 percent to touch Rs. 4,375 Crore in Q2FY23 as against Rs. 3,656 Crore.
2. Co-Lending book/Off. book AUM increased to Rs. 1,275 Crore in Q2FY23 (29% of Total AUM) as against Rs. 784 Crore in Q1FY23 (21% of Total AUM). The management in its Q2FY23 analyst concall siad that the off balance sheet AUM in the next two years will be 50 percent of the overall book.
3. Gross Disbursements for H1FY23 stood at Rs. 3,011 Crore, a 168% YoY Growth compared to Rs. 2,016 Crore in H1FY22. This is because all distribution channels following an aggressive strategy.
4. Total Income stood at RS 158 Crore for Q2FY23 (up 151% YoY and 27% QoQ) and Rs. 281.2 Crore for H1FY23 (up 146% compared to H1FY22).
5. Net Total Income grew by 23.8 percent on QoQ basis and by 144 percent on YoY basis to Rs.. 87.5 Crore in Q2'FY23. In H1FY23 it stood at Rs. 158.2 Crore for H1FY23 (up 144% compared H1FY22).
6. The portfolio yield has improved by 60 bps on QoQ basis to 17.3% in Q2FY23.
7. The Cost/Income ratio improved to 62.9 percent in Q2FY23 as against 72.1 percent in Q1FY23.
8. PBT increased by 69 percent on QoQ basis and by 274 percent on YoY basis to Rs. 17.6 Crore in Q2FY23. In H1FY23 it stood at Rs.27.9 Crore in H1FY23 (up 293% compared to H1FY22)
9. The Company's Networth as on H1FY23 stood at Rs. 955 Crore.
10. Portfolio GNPA and NNPA stood at 1.7% and 1.2% (as a % of Total AUM) respectively as of Sep.30, 2022.
11. Collection efficiency improved to 93.4 percent in Q2FY23 as against 92.8 percent in Q1FY23.
12. It has over 32,000 borrowers as on September 30, 2022.
13. UGRO Capital has 98 branches (as on Sep'22) with over 1,435 employees

Buy stock for a target price of Rs 276/share

Ajcon Global said, "We had initiated coverage on "UGRO Capital Limited" on October 2021 at Rs. 131.30 with a target price of Rs. 175.5, later upgraded to Rs. 272 after its Q4FY22 result. We continue our coverage on the Company post its Q2FY23 results and revise our price target to Rs. 276 per share. We hereby present the updated research report as on Q2FY23."

Disclaimer

The stock has been picked from the brokerage report of Ajcon Global. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before making any investment decision.