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Systematix Research Report
Stocks to Buy: We initiate coverage on Capri Global with a Buy rating and target price of Rs 250, valuing it at 2.85 times FY27E book value.
Capri Global Capital Ltd. is a well-diversified retail focused non-banking financial company with presence in gold, micro, small and medium enterprise, and housing loan segments. The company is well positioned, given the huge opportunity to grow in these segments. The company has a digital first approach and leverages robust technologies like data science, machine learning and artificial intelligence to enhance its customer experience, streamline business operations and increase profitability.
The AUM (as of Sept-24 it is at Rs 193 billion) has grown strongly at 31% CAGR over FY19-24, primarily aided by housing segment (39% AUM CAGR), MSME segment (21% AUM CAGR) and gold (six times growth in last 1.5 years).
The company has maintained its asset quality, with stage-III assets at ~2% (avg over FY19-FY24). Management guided for gross stage-III asset ratio of < 1.5% by March 2025 (1.6% in Q2 FY25).
Margins are likely to stay healthy going ahead, led by rising share of high yielding products and range bound cost of borrowings. Management expects its profitability and return ratios to improve over FY25-27 aided by-
robust business growth across products,
focus on high-yielding loan segment,
higher fee income and ability to cross sell to existing customers and
steady asset quality. Management has guided 30%+ growth in AUM over FY24-FY27E, which should translate into 31%/48% CAGR in ne interest income/ PAT with RoA/RoE of 3.2%/ 13.4%, by FY27E.
At current market price the stock trades at 2.4x FY27E book value (factoring in likely Rs 15 billion capital raise in FY26).
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