Capri Global Capital Ltd Q1 FY2025 Concall Summary

Key Takeaways

• AUM surged 56% YoY, gold loans the star: Gold loan AUM grew 238% YoY and all 750 branches are now above breakeven, turning the segment profitable at the operating level.
• A one-off credit hit masked improving core profitability: A ₹28 crore technical write-off in construction finance pushed up credit costs, but yields rose 70 bps QoQ and the cost-to-income ratio improved nearly 600 bps.
• A system migration temporarily stalled disbursements: MSME and housing finance growth paused as a new loan origination system went live; management says the platform stabilized in July and growth resumes from Q2.
• A ₹2,000 crore fundraise was enabled, not launched: The board approved an enabling resolution for equity, debt or convertible issuance, but no instrument, quantum or timeline has been decided.
• What to watch next quarter: Whether the promised MSME and housing finance disbursement rebound materializes, the pace of gold loan branch additions, and any further stress in the construction finance book.

AUM Growth & Product Mix

• Gold loan scale-up reached an inflection point: AUM grew 238% YoY, all 750 branches crossed ₹5 crore AUM (breakeven is ₹4.5 crore), and the segment became profitable at the operating level after 12–15 months of maturation per branch.
• Home loans provided steady ballast: The book grew 40% YoY and remains a core retail driver alongside gold loans and MSME.
• Micro LAP added a new granular layer: A separate vertical with a distinct team and branches now offers loans below ₹0.05 crore against collateral in rural areas.
• Product mix is expected to hold steady: Management guided that no single product will disproportionately outgrow others; MSME should stay around 28%, gold loans around 30%, and housing around 23% of the book.
• Car loans moved to a subsidiary: The business was transferred from Capri Global Capital Limited to a newly formed entity, and net fee income dipped QoQ on normal seasonality (Q1 is soft vs Q4).

Sharma: "gold loan this year will contribute significantly on the profitability side compared to the losses last year."

Asset Quality & Credit Costs

• A single construction finance account drove the credit cost spike: A ₹28 crore technical write-off hit the P&L in Q1; management expects to recover 80–90% based on past experience with similar cases.
• Gold price dip triggered LTV monitoring, not stress: The import duty cut softened gold prices, lifting LTVs on the existing portfolio; the company will reach out to customers for additional margin, and the average ticket size of ~₹90,000 keeps recovery timelines short.
• Construction finance and indirect lending are capped: Management committed to keeping their combined AUM share below 20%, with a focus on affordable housing residential projects and granular indirect lending.
• An analyst flagged a pattern of Q1 write-offs: The company took a similar write-off in Q1 FY24; management did not directly address whether the timing is strategic, only providing the prior-year breakdown of write-off vs provision.

Yields, Spreads & Cost of Funds

• Mix shift lifted yields 70 bps QoQ: Yield on advances rose from 15.6% to 16.3% as higher-yielding gold loans grew their share of the overall portfolio.
• Spreads widened 60 bps QoQ: The improvement in advance yields more than offset the increase in marginal cost of funds.
• Cost of funds is seen as range-bound: Management expects the cost to stay at current levels; any increase would be limited to 10–20 bps and can be passed through to new disbursals.
• Market borrowings began this quarter: The company raised ₹500 crore via commercial paper with an A1 Plus rating from CRISIL, diversifying its liability profile.

Operating Efficiency & Technology

• Cost-to-income improved sharply: The ratio fell to 64.6% from 70.5% QoQ as the company shifted focus from branch expansion to efficiency and productivity.
• A full-suite technology stack went live: Q1 saw the simultaneous launch of Loan Express (LOS for MSME and home loans), Swarnim (gold loans), Flex Cube (Oracle LMS), Capri Loans (omnichannel engagement), Pragati (digital onboarding), CollectXpress (collections), and the Capri Business Partner app.
• The transition temporarily depressed disbursements: MSME and housing finance volumes fell while the on-ground team was trained on the new loan origination system; the platform stabilized in July, and management expects full-fledged benefits from October onward.
• Operating leverage is expected to build further: With the branch network largely built, incremental revenue should flow through at a higher rate.

Sharma: "Automated processes and data science-driven decision-making, these are the 2 aspects which we are confident that we'll have an edge over most of the competition and be able to have a faster processing, better decisioning and better outcome in terms of asset quality and all."

Branch Network & Geographic Strategy

• Gold loan branch expansion is slowing to a crawl: After reaching 750 branches, the company plans to add only about 50 more in the coming year, describing the pace as gradual rather than aggressive.
• The South is off the map: Management explicitly ruled out entering South India for gold loans, citing deep penetration and larger competition; expansion will concentrate on North and West where scope remains.
• Branch-level productivity is now proven: Every gold loan branch has crossed ₹5 crore AUM, with the average reaching ₹7 crore, confirming the model works at scale.

Sharma: "We do not intend to go in South because we believe that South is already hugely penetrated and already the competition is in much larger areas. North and West still have a lot of scope."

Co-lending & Fee Income

• Co-lending AUM nearly tripled its share in a year: It rose to 16.4% of AUM from 6.2% in Q1 FY24, driven by stronger bank partnerships and a higher loan acceptance ratio with partner banks.
• The new technology is expected to sustain co-lending momentum: With the LOS and LMS now live, management anticipates continued growth in partner-originated loans.
• Insurance distribution was seeded with 11 tie-ups: The company aims to generate more than ₹20 crore in net fee income from insurance in FY25.
• Car loan fee income dipped on seasonality: Net fee income fell to ₹24.6 crore from ₹27.1 crore QoQ, a normal Q1 pattern for financial services.

Guidance & Commitments

Key Metrics