Capri Global Capital Ltd Q3 FY2025 Concall Summary

Key Takeaways

• AUM surged 55% YoY, led by gold loans: Gold loan AUM grew 196% YoY, while housing loans rose 31%, driving consolidated net profit up 88% YoY.
• Yields and spreads expanded meaningfully: Portfolio yield reached 16.7% and spread hit 7.3%, lifted by higher yields in housing finance (12.9%) and gold loans (20.6%).
• Cost-income ratio is improving fast: The ratio fell to 58.3% from 64.3% QoQ and a peak of 70.5% in Q4 FY24, as branch investments begin to pay off through operating leverage.
• Asset quality held steady with a conservative buffer: Gross Stage 3 at 1.7% and Net Stage 3 at 1% improved 40 bps YoY, while the provision coverage ratio stayed healthy at 39.4%.
• What to watch next quarter: Whether the 70 new Micro LAP branches begin contributing to MSME growth, the pace of further cost-income ratio reduction, and any update on the renewable energy financing pilot scale-up.

AUM Growth & Portfolio Mix

• Gold loans drove the quarter: AUM grew 196% YoY, with 776 branches now averaging ₹9.1 crores AUM per branch and over 65% of branches carrying a vintage above ₹5 crores.
• Housing and construction finance sustained momentum: Housing loans grew 31% YoY, while construction finance AUM rose 65% YoY, driven by demand for affordable residential projects and a pipeline of new deals.
• Construction finance is granular by design: The ₹3,700 crore portfolio is spread across 275+ projects with an average ticket size of ₹13 crores; most sanctions stay below ₹25 crores, and cumulative NPAs have stayed under ₹250 crores against over ₹12,000 crores lent over 12 years.
• Co-lending partnerships provide a stable funding lever: About 18% of AUM sits under co-lending arrangements with nine banks across MSME, affordable housing, and gold loans, a ratio management intends to maintain at 18–20% going forward.
• Gold loan LTV sits comfortably within regulatory limits: At 71–72% LTV against a 75% maximum, and with gold’s liquidity ensuring full recovery even in auction or NPA cases, management sees the buffer as healthy.

Sharma: "Gold being very liquid, I think these are very healthy levels of the LTV levels. And even with the auctions and the NPA cases, we are able to recover fully."

Profitability & Margins

• Yield expansion lifted spreads: Portfolio yield rose to 16.7% and spread to 7.3%, driven by housing finance yields reaching 12.9% and gold loan yields hitting 20.6%.
• Cost-income ratio fell sharply as branch investments matured: The ratio dropped to 58.3% from 64.3% QoQ and from a peak of 70.5% in Q4 FY24, reflecting efficiency gains after three years of heavy branch expansion.
• Non-interest income grew 20% YoY in 9M FY25: ₹319 crores came from co-lending fees, car loan origination fees, and insurance income, with insurance fee income alone expected to exceed ₹60 crores for the full year.
• Net profit jumped on operating leverage: Consolidated net profit rose 88% YoY and 32% QoQ, and management expects annualized RoAA and RoAE to keep improving.
• Borrowing costs are largely floating and pass-through ready: Less than 5% of borrowings are fixed-rate, so the company can pass on any floating-rate increase to customers, though management expects the rate cycle to stay flat before eventually declining.

New Product Launches & Branch Strategy

• Micro LAP launched under the MSME umbrella: A small-ticket secured loan for self-employed customers debuted with 70 dedicated branches, and the existing 150-plus MSME branch network will be evaluated to add Micro LAP lending by layering in a team, lowering incremental cost.
• Rooftop solar loans and a renewable energy pilot went live: The rooftop solar product launched this quarter, while a separate renewable energy financing pilot targets ₹1,000 crores AUM over roughly four years, governed by the government subsidy scheme.
• Branch expansion will resume from June onward: The next year’s plan, to be finalized by March, envisions 100–150 new branches across MSME, affordable housing, gold loan, and Micro LAP, with additions starting in June.
• MSME growth is expected to accelerate next year: Management flagged that the segment will show better growth as new branches come online and the Micro LAP network begins contributing.

Asset Quality & Risk Management

• Credit cost rose QoQ but fell YoY: Gross Stage 3 stood at 1.7% and Net Stage 3 at 1%, a 40 bps YoY improvement, with a provision coverage ratio of 39.4%.
• Construction finance has a 12-year track record of minimal delinquency: Cumulative NPAs have stayed below ₹250 crores against over ₹12,000 crores lent, a result of small ticket sizes, retail-style underwriting, and project-level diversification.
• Management committed to a hard net NPA ceiling: Net NPA will be kept at or below 1%, reinforcing the conservative posture.

Sharma: "Hardly, we have seen any delinquency. And collectively in last 10, 12 years, we haven't seen the NPAs more than INR250 crores when we would have lend more than INR12,000 crores."

Technology & Operating Model

• Gold loan onboarding is fully paperless: A customer walks in with only gold ornaments; onboarding uses Aadhaar OTP or face recognition, PAN verification, app-based ornament photography with terms, OTP-based agreement, and disbursement to a bank account or payment wallet, even for a ₹30,000 loan taken by someone who cannot sign.
• A dedicated tech center and data science team are in place: The Gurgaon tech center houses 125-plus engineers, with 25 data scientists across Bangalore, Pune, Mumbai, and Delhi, supporting predictive analytics for customer repayment behavior and targeting.
• Turnaround time will keep falling: Management expects continued improvement in turnaround time across all segments, which it sees as a competitive differentiator that will also pull the cost-income ratio lower.
• Investment in AI and digital tools will continue: Sales staff will be equipped with updated digital apps to serve customers faster and at lower cost, reinforcing the efficiency drive.

Sharma: "When the customer walks in, in our branch, he has to just bring the gold ornaments, and no paper is required. He is onboarded with his Aadhaar OTP or face recognition... So there's zero paperwork involved even in the INR30,000 loan taken by a person who doesn't know how to sign."

Guidance & Commitments

Key Metrics