- Stock Split: Approved from INR 2 face value to INR 1 face value.
- Bonus Issuance: Approved in the ratio of 1:1.
- Paid-up Equity Share Capital: Increase from INR 412.5 million to INR 824.9 million.
- Outstanding Equity Shares: Increase from 206.23 million shares to 824.9 million shares.
- Overall AUM: Grew by 54% year-on-year to INR 13,360 crores.
- Overall Disbursement: Increased by 113% year-on-year to INR 9,983 crores.
- Branch Count: Increased by 311 branches to a total of 920.
- Gold Loan AUM: Grew by 235% year-on-year to INR 2,394 crores.
- Home Loan AUM: Grew by 53% year-on-year to INR 3,490 crores.
- Construction Finance AUM: Grew by 35% year-on-year to INR 2,271 crores.
- MSME Loan AUM: Grew by 24% year-on-year to INR 4,768 crores.
- Total Net Income: Grew by 59% year-on-year.
- Gross Stage 3 Asset: Declined by 20 basis points year-on-year to 2.1%.
- Car Loan Origination: INR 7,073 crores, up by 83% year-on-year.
- Net Fee Generated: INR 81 crores in 9-month period for FY '24.
- Cost-to-Income Ratio: Declined by 392 basis points quarter-on-quarter and 651 basis points year-on-year to 63%.
- Operating Expenses: INR 2,203 million, unchanged quarter-on-quarter.
- Pre-Provisioning Operating Profit: INR 1,296 million, increasing by 19% quarter-on-quarter and 78% year-on-year.
- GNPA Ratio: Increased by 80 basis points quarter-on-quarter to 2.10%.
- Net Profit: INR 680 million, higher by 82% year-on-year and 4% quarter-on-quarter.
- ROA: 2% in Q3 FY '24.
- ROE: 7.3% in Q3 FY '24.
Release Date: January 27, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Capri Global Capital Ltd (BOM:531595, Financial) reported a robust 54% year-on-year growth in overall AUM, reaching INR 13,360 crores.
- The company's net profit increased by 82% year-on-year to INR 680 million.
- The Board approved a stock split and a 1:1 bonus issuance, which is expected to improve liquidity.
- The company added 311 branches year-on-year, bringing the total branch count to 920, aiding in business expansion.
- Capri Global Capital Ltd (BOM:531595) has appointed three distinguished leaders as independent directors, strengthening its Board and executive management.
Negative Points
- The gross NPA ratio increased by 80 basis points quarter-on-quarter to 2.10%, indicating a rise in non-performing assets.
- The Gold Loan business is currently incurring losses, with an expected loss of INR 100 crores for the year.
- The cost-to-income ratio remains elevated at 63%, despite a decline of 392 basis points quarter-on-quarter.
- The company's incremental cost of funds has increased, with a current rate of 9.8% for CGCL and 9% for the housing finance segment.
- There is a significant rejection rate of 60% for loan applications, indicating stringent credit criteria or potential issues in loan approval processes.
Q & A Highlights
Capri Global Capital Ltd (BOM:531595) Q3 FY '24 Earnings Call Highlights
Q: What level of business does a Gold Loan branch need to achieve to break even, and how many branches are currently at that level?
A: Branches start breaking even at INR 3 crore. Out of 747 Gold Loan branches, 313 have crossed INR 3 crore, with some even exceeding INR 5 crore. (Rajesh Sharma, CFO, MD, Executive Director)
Q: What are the cross-selling opportunities at Gold Loan branches?
A: Gold Loan branches have the capability to sell insurance policies to borrowers. The company aims to generate about INR 30 crore in insurance policy premium income annually, starting from April. (Rajesh Sharma, CFO, MD, Executive Director)
Q: Could you elaborate on the expected ROE of 15% with the help of insurance?
A: The Gold Loan vertical is expected to turn profitable next year, contributing INR 40-50 crore. Car Loan distribution and insurance cross-sell will also add significant fee income, supporting the target of 15% ROE by FY '26 or FY '27. (Rajesh Sharma, CFO, MD, Executive Director)
Q: What is the rationale for creating a separate subsidiary for auto loans?
A: The subsidiary will help scale the Car Loan origination business, which is expected to grow by 20% next year. The company has a dealership network of about 1,800 locations across India. (Rajesh Sharma, CFO, MD, Executive Director)
Q: Have there been any directions from NHB to slow down co-lending disbursement in housing finance?
A: No such directions have been received. NHB is supportive and aims to make credit easily available for first-time homebuyers. The company plans to continue growing this segment at a 50% pace. (Rajesh Sharma, CFO, MD, Executive Director)
Q: What is the company's strategy for the MSME business segment?
A: The MSME business has grown by 24%. The company is evaluating launching micro loans with ticket sizes less than INR 7.5 lakh. Expansion into new geographies is under consideration for FY '25. (Rajesh Sharma, CFO, MD, Executive Director)
Q: What is the expected cost-to-income ratio excluding the Gold Loan vertical?
A: The cost-to-income ratio excluding Gold Loan is expected to come down to around 45% next year, with further improvements anticipated as technology initiatives take effect. (Rajesh Sharma, CFO, MD, Executive Director)
Q: What is the incremental cost of funds for the quarter?
A: The incremental cost of funds is about 9% for the housing finance company and 9.8% for CGCL. (Rajesh Sharma, CFO, MD, Executive Director)
Q: Who are the key co-lending partners for gold loans, mortgages, and SMEs?
A: Key co-lending partners include Yes Bank, State Bank of India, Union Bank of India, Punjab & Sind Bank, UCO Bank, and Indian Overseas Bank. (Rajesh Sharma, CFO, MD, Executive Director)
Q: What are the anticipated ROA and ROE for FY '25 and '26?
A: The company expects an ROA of 2.75% to 3% and an ROE of 11.5% to 12% for FY '25. (Rajesh Sharma, CFO, MD, Executive Director)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
