Capri Global - Expect AUM Of Rs 30,000 Crore In Next Five Years: ICICI Securities
Upfront investment towards branch expansion impacted earnings; increased focus on productivity improvement to drive profitability.
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ICICI Securities Report
Capri Global Capital Ltd., in its analyst day on September 15, 2023, reiterated its vision to grow its portfolio to Rs 30 billion in the next five years, while continuing to pursue ‘granularisation’ strategy.
New products, i.e. gold loans, car loan distribution and co-lending are likely to be its primary growth drivers, coupled with more than 30% growth in existing product segments.
The management also highlighted its plans to heavily invest in technology/data science (~Rs 500 million budgeted for FY24) in order to enhance risk management and improve operational efficiencies.
It also targets a mid-teen return on equity by FY24 driven by high yielding gold loan portfolio (~18%-21%), higher growth in fee-based co-lending and car loan book and operational efficiencies,
However, the stock rerated sharply over the past six months capturing most positives, thus, leaving limited scope for rerating, in our view.
We maintain 'Reduce' rating on the stock with target price unchanged at Rs 695, at a multiple of 3.5 times to Sep‘24E book value per share.
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