Capri Global - Foray Into Gold Loan Business In FY23; Car Loan Distribution Gaining Traction: ICICI Securities

ICICI Securities Report

Capri Global Capital Ltd. demonstrated superior execution of its ‘granularisation’ strategy in FY23 with combined share of micro, small and medium enterprise, gold and affordable housing increasing to 79% (74% in FY22) and trimming construction finance share to 18% versus 19% in FY22.

Notably, car loan business scaled new heights; it disbursed close to Rs 60 billion car loans in FY23 with branch plus fleet-on-street expanding to 450 by March 2023 from 213 in March 2022.

During FY23, Capri Global forayed into gold financing and expects gold loan assets under management to contribute ~25% of consolidated AUM over the next four-five years with total branch network of 1,500 in the near term.

Considering high yields in gold loans (~18-21%) versus blended yield of 15.2% during Q4 FY23, it expects net interest margin to improve or stabilise going ahead.

Overall, with up-fronting gold loan related investment in FY23, likely AUM growth at 30- 35% in FY24 (capital raising of Rs 14.4 billion via rights to support growth) and stable asset quality, it expects return on equity to remain in mid-teens in FY24.

The stock rerated sharply over the past six months capturing most positives, thus, leaving limited scope for rerating, in our view.

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