Shares of Ugro Capital Ltd were trading 5% higher on 22 November after the company issued a clarification on how the RBI (Reserve Bank of India) circular on increased credit risk would not affect the company’s loan book.

In its regulatory filing, the company said that the company’s debt-equity ratio stood at 2.8x while its capital adequacy was at 24.8%. The consumer and personal loan customers would fall under the Priority Sector Lending loan book.

As the customer base has Udyam registrations, the company would not have any additional risk weightage. The company added that RBI’s circular increased risk weightage for capital adequacy ratio, Return on Asset, and Return on Equity would be none.

The company also said since its asset under management comes under the Priority Sector Lending classification, it shouldn’t have an extra impact on material cost while borrowing from banks.

In its quarterly earnings for July-September, the company reported a multi-fold increase in its net profit to Rs 28.89 crore during the quarter against Rs 5.27 crore reported in the year-ago quarter.

The company’s revenue during the quarter went up by 62.23% year-on-year to Rs 244.57 crore.

At 3:30 pm, the shares of Ugro Capital closed 3.28% higher at Rs 270.90 on NSE.