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Capri Global Capital Ltd

| Q2 FY26 Earnings Conference Call

BULLISH SENTIMENT

Report Source

⬤31st Oct 25

Summary : Capri Global Capital delivered strong Q2FY26 results with robust AUM growth, improved profitability, and strategic branch expansion, supported by technology and diversified funding, while maintaining a positive outlook for future growth.

Management Perspective positive : Management consistently highlighted strong performance, robust growth across segments, improved efficiency, and ambitious future targets. Phrases like 'strong momentum,' 'robust performance,' 'highest ever quarterly profit,' and 'well placed to deliver' indicate a positive outlook.

Concall Report Analysis & Insights

Business Overview

  1. Consolidated AUM grew 40% YoY to INR27,040 crores, with 9% QoQ growth.
  2. Gold loan AUM surged 58% YoY to INR10,406 crores, housing loans rose 37% YoY.
  3. Co-lending AUM increased 61% YoY to INR5,677 crores, now 21% of total AUM.
  4. Net Interest Income grew 57% YoY to INR480 crores, PAT increased 143% YoY to INR236 crores.
  5. Cost-to-income ratio improved significantly to 49% from 64% YoY, reflecting operational efficiency.

Future Growth Prospects

  1. Targeting 25-30% annualized AUM growth and 16-18% ROE, 4-4.5% ROA by FY28.
  2. AUM expected to reach INR32,000 crores by FY26 and INR42,000 crores by FY27.
  3. PAT projected at INR850 crores for FY26 and INR1,200 crores for FY27.
  4. Expanding branch network with ~200 new branches planned in next two quarters.
  5. Cost of funds expected to decline by 30-40 basis points in 2-3 quarters.

Management Insights

  1. Successfully completed maiden public NCD issuance of INR400 crores, oversubscribed across all investor categories.
  2. Strong investor trust reflects confidence in business model, governance, and long-term growth outlook.
  3. Broad-based expansion across all lending businesses underpinned robust AUM growth.
  4. Technology investments are central to scaling securely, efficiently, and profitably, enhancing asset quality.
  5. Achieved highest ever quarterly profit, well-positioned for sustained growth.

Signs of Skepticism

  1. Analyst questioned the achievability of 30% YoY AUM growth for FY27 given previous year's growth rate.
  2. Analyst noted a potential mismatch in ROA calculation for FY27, which management clarified by explaining average asset calculation.

Risk Factors

  1. Management projects credit costs conservatively at 80-90 basis points, up from historical 70 bps.
  2. Growth in Micro LAP portfolio might lead to a slight increase in credit costs.
  3. The external environment for the overall MSME book remains unchanged.

Good To Know

  1. Invested INR29 crores in technology, deploying AI-driven initiatives for asset quality and recovery.
  2. Launched a digital auction platform for repurchase properties and Capri Care for insurance distribution.
  3. Improved Sustainalytics ESG risk rating from high to medium risk (31.1 to 24).
  4. Strengthened leadership team with Mr. Monu Ratra appointed as CEO.

Key Drivers

  1. Strong AUM growth across all segments.
  2. Improved operational efficiency and margins.
  3. Successful NCD issuance diversifies funding.
  4. Technology investments enhance asset quality.

Key Analyst Discussions

Market Trends & Consumer Behavior

  1. Gold loan customers are 55% repeat borrowers, often for short-term business opportunities.
  2. Affordable housing demand remains resilient due to rising incomes and lower interest rates.

Financial Highlights

  1. Net interest margin improvement driven by capital infusion and higher mix of gold loans and Micro LAP.
  2. Cost of funds expected to decrease by 30-40 bps due to lower MCLR and new loan pricing.
  3. Credit cost guidance increased to 80-90 bps due to conservatism and Micro LAP portfolio growth.
  4. Cost-to-income ratio expected to remain 47-50% in the coming year, then decline by 4-5% in two years.
  5. Targeting ROA of 4.25-4.5% and ROE of approximately 16%.

Product Composition

  1. Target AUM mix: 40% gold loans, 20-22% each for MSME, affordable housing, and construction finance.
  2. Housing yield targeted to improve to 13.7% by focusing on smaller ticket sizes and Tier 3/4 locations.
  3. MSME AUM growth is 16%, with live accounts up 35% including Micro LAP.

Strategic Considerations

  1. Branch expansion strategy includes 86 new branches, with focus on gold, Micro LAP, and housing.
  2. Co-lending will remain around 20% of AUM, considered a capital-efficient model.
  3. AUM targets are INR32,000 crores for FY26 and INR42,000 crores for FY27.
  4. PAT targets are INR850 crores for FY26 and INR1,200 crores for FY27.