Buy Capri Global Capital Ltd For Target Rs.320 by Choice Institutional Equities
Resilient Growth across Segments:
CGCL Q2FY27 performance was driven by higher NII and PPoP. Total AUM grew by 62.3% YoY / 9.4% QoQ. Gold Loans AUM expanded by 101.8% YoY / 9.5% QoQ to INR 210.0 Bn, while the Housing Finance and Construction Finance increased by 39.4% YoY (+6.5% QoQ) to INR 83.3 Bn and 51.0% YoY (+18.5% QoQ) to INR 75.0 Bn, respectively.
Higher NII and PPoP Growth Lead Healthy Growth in Profitability
* CGCL reported a quarterly PAT of INR 4,183 Mn in Q2FY27, up 77.3% YoY and 18.4% QoQ, driven by higher NII and PPoP growth and lower operating expenses
* Consolidated AUM grew by 62.3% YoY / 9.4% QoQ to INR 438.8 Bn, driven by robust growth of 101.8% YoY in Gold Loans, 39.4.3% YoY in Housing Loans and 51.0% YoY in Construction Finance
* Non-interest income increased by 35.6% YoY (+25.2% QoQ) to INR 3,233 Mn, accounting for 28.5% of the total income
* Car loan origination improved 27.2% YoY to INR 36,005 Mn in Q2FY27, led by increase in average ticket size, which stood at ~INR 1.3 Mn
* Reported NIM declined sequentially to 9.6% (vs. 9.7% QoQ)
* Asset quality deteriorated sequentially. GNPA increased to 1.25% (+19 bps QoQ), whereas NNPA increased to 0.84% (+23 bps QoQ)
Stronger AUM Growth Momentum Drives Strong Earnings Visibility
We forecast CGCL’s AUM and Loan growth to remain resilient at 34.3% and 36.0% CAGR over FY26–FY28E, respectively, on account of rapid branch expansion. The company is anticipated to expand its network by opening 400– 450 Gold Loan branches in the next two quarters.
We forecast NIM on Interest Earning Assets (IEA) to expand to 8.6% and 8.2% in FY27E and FY28E, respectively. We anticipate higher NII for FY27E/FY28E by +3.7%/+4.4%, 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 at 3.9%/3.9%, respectively
View and Valuation:
We revise our FY27E/FY28E PAT estimate by +1.8%/ +2.1%, respectively, driven by stronger NII and AUM growth. We anticipate consolidated AUM to reach INR 660.2 Bn by FY28E
We value CGCL using residual income approach at INR 320.0 and retain our ‘BUY’ rating on the stock. Our target price indicates FY27E/FY28E Price to Adjusted Book Value of 3.6x/2.9x
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SEBI Registration no.: INZ 000160131
