Concall AI

Capri Global Capital Limited — Q1 FY21 earnings call

Call held 4 Aug 2020

What they filed

Q1 FY27: revenue up 61.0%, net profit up 109.3% against the same quarter last year.

₹ Cr · quarterly

Line item	Q2 FY25	Q3 FY25	Q4 FY25	Q1 FY26	Q2 FY26	Q3 FY26	Q4 FY26	Q1 FY27
Revenue	554	601	732	766	867 +56%	943 +57%	1,071 +46%	1,233 +61%
Expenses	187	188	228	246	257	302	343	329
EBITDA	463	528	621	647	744 +61%	—	—	—
Margin	62%	64%	65%	64%	66%	—	—	—
Other income	4	4	3	4	5	5	8	6
Interest	234	250	272	305	310	328	390	466
Depreciation	21	22	24	21	22	24	26	24
Profit before tax	115	144	211	198	283 +146%	295 +105%	320 +52%	419 +112%
Tax rate	25%	25%	25%	24%	25%	25%	24%	25%
Net profit	86	108	158	150	212 +147%	221 +105%	243 +54%	314 +109%
EPS	1.05	1.31	1.92	1.56	2.20	2.29	2.52	3.26

How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Guidance & targets

profitability

Cost to Income Ratio profitability · FY21 · medium confidence below 30%

I expect that this year cost to income ratio may not remain the same in the next quarter, but we will try to maintain below 30% as against the last year of 38%.

— Rajesh Sharma (Managing Director)

growth

MSME Business Growth growth · coming couple of quarters · high confidence grow further

I expect we will grow further based on the lockdown opening and normalcy coming back. Second, MSME is going to be our key growth driver.

— Rajesh Sharma (Managing Director)
Construction Finance Book Growth growth · going forward · high confidence remain at the same level

we expect our construction finance to remain at the same level what it is now. So, whatever the repayments are coming to that extent we will grow, in absolute terms book may not grow in construction finance

— Rajesh Sharma (Managing Director)
Affordable Housing Segment Growth growth · going forward · high confidence strong growth

we expect this segment will continue to register a strong growth going forward.

— Rajesh Sharma (Managing Director)
ECLGS Disbursement growth · by October 2020 · medium confidence INR 150 crore

Additionally, we are planning to disburse about INR 1,500 million to MSME under the Government guarantee emergency credit line by October 2020.

— Rajesh Sharma (Managing Director)

financial

NPA Spike financial · post-moratorium · low confidence half percent or 1%

There may be a temporary spike in the NPA by half percent or 1%, at this moment we are not able to judge it.

— Rajesh Sharma (Managing Director)

Risks & concerns

Impact of COVID-19 pandemic on business operations and customer repayment capacity.
high
Customer misunderstanding of loan moratorium leading to non-payment.
medium
Potential temporary spike in Non-Performing Assets (NPAs) post-moratorium.
medium

Q&A highlights

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3 min read 4 chapters

Detailed narrative

Market Outlook

Most enterprises in semi-urban and rural areas are already back on track, resuming operations by end of May/June. Major urban centers, epicenters of COVID-19 cases, are expected to normalize by October end. Demand for affordable housing is undented, and this segment is expected to register strong growth. Developers expect demand to return to pre-COVID levels by October-November.

Business Segments

MSME Lending

Key focus area, constituting 51% of the book. Effective moratorium cases (by count) dropped from 45% in April to 28% in June; by POS, from 53% to 38%. Collection efficiency (assuming no moratorium) increased from 47% (POS) in April to 62% (POS) in June. 99 out of 144 branch managers are in tier 3/4 towns with low COVID cases, where business is back to normal.

Outlook: Expected to be a key growth driver. New business sourcing and top-up loans launched for existing, performing customers. Planning to disburse approximately INR 150 crore under ECLGS by October 2020. Expects to reach about 80% business capacity by October end.

Housing Finance

Constituting 23% of the overall portfolio. Effective moratorium cases (by count) dropped from 30% in April to 20% in June; by POS, from 33% to 24%. Collection efficiency (assuming no moratorium) increased from 67% (POS) in April to 76% (POS) in June.

Outlook: Targeting tier 2 and tier 3 cities. Consumer sentiment survey indicates demand for affordable housing is undented post-COVID-19. Expects this segment to continue registering strong growth going forward.

Construction Finance

Constituting 24% of the overall portfolio. Effective moratorium cases (by count) dropped from 50% in April to 35% in June; by POS, from 56% to 46%. About 70% of developers have resumed work at their project sites. Worst affected regions are MMR and Pune, but other centers like Chennai, Vijayawada, Surat, Baroda, Ahmedabad, Jaipur have resumed activity.

Outlook: Caters to small developers (average business size INR 74 million) focusing on affordable housing in tier 3/4 towns. The book is expected to remain at the same level, with absolute growth not anticipated. Repayments will drive new disbursements.

Competitive Position

The granularity and retail nature of Capri Global's loan assets (MSME and affordable housing) are assuring to banks, enabling the company to raise incremental liquidity even when large-ticket size lenders face difficulties. Its strategic focus on mid and small-size developers catering to the affordable housing segment in tier 3/4 towns differentiates it from other financial institutions focused on premium residential demand.

Strategic Initiatives

Stringent cost control: Rationalized branch network (realigned low-productivity branches, started resident branches), reduced rents, and trimmed non-productive staff. Aiming for cost-to-income ratio below 30% for FY21.

Enhanced digital infrastructure: Significantly ramped up digital payment infrastructure and launched technological initiatives to benefit collection, underwriting, and investment risk management.

Small Finance Bank exploration: Board authorized to explore and prepare for a Small Finance Bank license. Believes it's a long-term strategy to control liabilities, raise deposits, and enable cross-selling of other products.

Cautious ECLGS lending: Developed three categories of criteria for ECLGS, focusing on standard customers who have paid all EMIs and whose businesses have resumed. Preferring top-up loans over ECLGS due to longer tenure for customers.

This is an AI-generated summary of a publicly available earnings call transcript.

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