Buy Capri Global Capital Ltd For Target Rs.280 by Choice Institutional Equities Ltd
Resilient Growth across Segments:
CGCL Q1FY27 performance was driven by resilient and strong AUM growth. Total AUM grew by 62.0% YoY / 9.5% QoQ. Gold Loans AUM grew by 110.6% YoY / 13.1% QoQ to INR 191.8 Bn, while the Housing Finance and Construction Finance increased by 42.3% YoY (+4.9% QoQ) to INR 78.2 Bn and 40.1% YoY (+10.9% QoQ) to INR 63.3 Bn, respectively.
View and Valuation:
We revise our FY27E/FY28E PAT estimate by +1.1%/ +3.5%, respectively, driven by stronger NII and AUM growth. We expect consolidated AUM to reach INR 648.6 Bn by FY28E. We value CGCL using residual income approach at INR 280.0 and maintain our ‘BUY’ rating on the stock. Our Target Price indicates FY27E/FY28E Price to Adjusted Book Value of 3.1x/2.5x.
Stronger Profitability led by Higher NII and AUM Growth
* CGCL reported a quarterly PAT of INR 3,534 Mn in Q1FY27, up 102.0% YoY and 25.0% QoQ, driven by robust NII and AUM growth and lower operating expenses
* Consolidated AUM grew by 62.0% YoY (9.5% QoQ) to INR 401.1 Bn, driven by robust growth of 110.6% YoY in Gold Loans, 42.3% YoY in Housing Loans and 40.1% YoY in Construction Finance
* Non-interest income increased by 32.2% YoY (-12.0% QoQ) to INR 2,583 Mn, accounting for 26.0% of the total income
* Car loan origination improved 43.0% YoY to INR 32,829 Mn in Q1FY27, led by increase in average ticket size, which stood at ~INR 1.2 Mn
* Reported NIM improved sequentially to 9.7% (vs. 9.2% QoQ) driven by a sharp sequential increase of 170 bps in gold loan yields ? Asset quality declined sequentially. GNPA increased to 1.1% (+14 bps QoQ), whereas NNPA increased to 0.6% (+6 bps QoQ)
AUM Momentum Drives Strong Earnings Visibility
We forecast CGCL’s AUM and Loan growth to remain resilient at 33.1% and 35.3% CAGR over FY26–FY28E, respectively, on account of rapid branch expansion. The company is anticipated to expand its network by opening 350– 400 Gold Loan branches in the next two quarters. We expect NIM on Interest Earning Assets (IEA) to expand to 8.4% and 8.1% in FY27E and FY28E, respectively. We forecast higher NII for FY27E/FY28E by +3.0%/+2.8%, respectively, as compared to our previous estimate.
Higher AUM and NII are projected to drive improvement in overall profitability resulting in FY27E/ FY28E annualised RoAA to expand to 3.9%/3.8% respectively
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SEBI Registration no.: INZ 000160131
