Add Capri Global Capital (CGCL) Ltd For Target Rs. 230 By Choice Broking Ltd
Posts Strong AUM Growth
Strong Growth across Key Verticals: CGCL posted strong growth across all its major verticals. Total book grew by 40% YoY / 9% QoQ, with the latest product Micro-LAP also outperforming the overall industry credit growth. Gold Loans, Housing Finance and Construction Finance also posted good growth of 14% / 9% / 10%, respectively.
View and Valuation: We maintain our FY26E/FY27E estimate supported by a stellar growth performance across categories. With key upcoming triggers, such as re-rating of borrowings, a subdued interest rate cycle, branch cost normalisation, we remain positive on the stock. We maintain our target price at INR 230, using the residual income approach. Our Target Price implies Adj. FY27E/FY28E Price to Book Value of 2.9x/2.5x; hence, we change our rating to ‘ADD’.
Sharp Surge in Profits Buoyed by ARC Sale and Lower Provisioning
* CGCL reported a record quarterly PAT of INR 2,360 Mn in Q2FY26, up 143% YoY and 35% QoQ, driven by robust AUM growth, strong other income (ARC sale) and lower provisions.
* AUM rose 40% YoY (9% QoQ) to INR 270 Bn, led by a 58% surge in Gold Loan and a 37% rise in Housing Loan.
* Non-interest income grew 131% YoY (22% QoQ) to INR 2,385 Mn, forming 33.2% of the total income.
* Car loan originations improved 14% YoY to INR 28,304 Mn in Q2FY26. Insurance distribution earned INR 2,780 Mn (119% YoY and flat QoQ) fee income.
* NIM expanded to 9.5% (vs. 8.9% QoQ) due to an increased share of highyield Gold Loan portfolio.
* Asset quality (ex-ARC sale) remained stable. However, on a gross basis, GNPA declined to 1.3% (down 36 bps YoY and 39 bps QoQ) and NNPA improved to 0.7% (down 25 bps YoY).
Improving NIMs and Heightened Operating Leverage to Boost Profitability
CGCL’s accelerating growth and declining cost base support a continued upward trajectory, underpinned by broad-based AUM expansion and record disbursements. The franchise is scaling up granularly with Gold Loans as a profitable growth engine, increasing branch productivity and a materially lower cost-to-income ratio at ~49% in Q2FY26 (vs. ~64% YoY) demonstrating durable operating leverage and distribution efficiency gains. Margin expansion is aided by a better borrowing mix and improved access to markets, after a well-received maiden public NCD issuance. While sales to ARCs are a one-time activity, we believe CGCL’s collection efficiency will be critical for controlling credit costs. Annualised ROE stood at ~14.4% and ROAA at ~4.0% for Q2FY26. Tech-enabled underwriting, collections and analytics will further compress unit costs and enhance productivity. Hence, we remain optimistic about CGCL’s long-term profitability and growth trajectory.
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