UGRO to focus on reducing pricier borrowing costs in FY27, says MD

The company, which has grown its assets under management in 2025, said the sharp expansion in recent years had necessitated higher liability mobilisation, impacting borrowing costs

Non-bank lender UGRO Capital's borrowing costs are higher than peers by 1.25 per cent, and the company will focus on reducing them in FY27, a top official has said.

"Our focus is now to reduce our cost of borrowing. Our cost of borrowing is at least 1.25 per cent higher than that of our peers. So, the focus is to reduce that because if we don't reduce that, both the end customer, we cannot service well," the founder and managing director of small-business-focused lender, Sachindra Nath, told PTI.

The company, which has grown its assets under management from around ₹3,000 crore in 2020 to nearly ₹15,000 crore in 2025, said the sharp expansion in recent years had necessitated higher liability mobilisation, impacting borrowing costs.

 

"With the base now becoming large and growth expected to moderate, the demand for liabilities will also reduce. This will give us the flexibility to negotiate better rates," he said.

He indicated that while its liability mix will broadly remain unchanged, about 40 per cent from banks, around 20 per cent from global development financial institutions and the balance from capital markets, the focus will shift to repricing and improving terms.

Nath said improved credit ratings and a more stable balance sheet position are expected to support the effort to narrow the 1-1.25 per cent gap with peers. He, however, noted that the pace of reduction will depend on overall market conditions.

Further, he also ruled out any equity capital raise over the next three years, saying the company is adequately capitalised. On the debt side, he described liquidity as "fairly strong", supported by relationships with banks, global DFIs and capital market investors.

He added that the acquisition of Profectus Capital last year has strengthened UGRO's secured asset base and improved operational efficiency.

The deal added around ₹3,000 crore of secured assets to the balance sheet.

More importantly, he highlighted cost synergies. Approximately ₹120 crore of cost savings have already been realized, with total realignment benefits of about ₹220 crore expected to enhance cash profitability significantly in FY27.