Capri Global Capital Limited — Q3 FY20 earnings call

Call held 13 Feb 2020

What they filed

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

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue554 601 732 766 867 +56%943 +57%1,071 +46%1,233 +61%
EBITDA463 528 621 647 744 +61%— — —
Net profit86 108 158 150 212 +147%221 +105%243 +54%314 +109%
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

growth

  • Loan Book growth · FY25 · high confidence INR 20,000 crore
    Accordingly, we have rationalized our long-term guidance for FY25 and we would like to to build a book of INR 20,000 crore with MSME and affordable housing being our key focus area.

    — Rajesh Sharma (Managing Director)

  • Q4 Disbursement and Income Level growth · Q4FY20 · medium confidence highest disbursement
    Of course, this quarter we expect being the last quarter with every NBFC and lending industry, your disbursement happens the highest, so we also see that. Our income level should be better in this quarter.

    — Rajesh Sharma (Managing Director)

profitability

  • Overall NPA Level profitability · FY20 · high confidence not go beyond this level
    Our target is to not let this go beyond this level.

    — Rajesh Sharma (Managing Director)

  • MSME NPA profitability · Q4FY20 · high confidence less than 4%
    we are quite confident that by the March end it will come below 4%.

    — Rajesh Sharma (Managing Director)

financial

  • Securitization as % of total borrowing financial · near future · medium confidence about 20%
    I feel going forward the securitization will be about 20% of total borrowing and 80% borrowing will continue to be led by bank borrowing in the tenure of 5-8 years.

    — Rajesh Sharma (Managing Director)

  • Borrowing Cost financial · near future · medium confidence come down by about 50 basis or so
    I think borrowing cost otherwise also is going to come down by about 50 basis or so.

    — Rajesh Sharma (Managing Director)

Risks & concerns

  • Bleak overall operating environment and struggling economy

    medium

  • NBFC sector struggling with liquidity and asset quality concerns

    medium

  • Increase in Gross and Net NPA for the quarter, particularly in MSME segment

    medium

  • Slowing macro environment and stress in MSME book leading to slower growth

    medium

Q&A highlights

0 direct

Asked by Parthiv Jhonsa, NVS Brokerage

Asked by Ravikant Bhat, India Nivesh

Asked by Raghav Kabra, Excel Investments

Asked by Anadi Kaistha, Vivrithi Capital

Asked by Preeti Singh, Value investments

Asked by Siddharth Mehta, Individual investor

Asked by Raghav Kabra, Excel Investments

2 min read 4 chapters

Detailed narrative

Market Outlook

Management believes the trouble for NBFCs and housing finance companies is behind them, with credit flow returning due to government and RBI measures. They anticipate well-managed companies will return to a growth path and have significant opportunities. The segment of underbanked and underserved customers in India offers substantial long-term growth potential.

Business Segments

MSME Lending

Key focus area, constitutes over 50% of the book. Gross NPA in this segment increased by 65 bps QoQ.

Outlook: Expect vertical-wise MSME NPA to come back to less than 4% by March end due to increased emphasis on collection. Identified as a key focus area for future growth.

Affordable Housing

NPA less than 2%.

Outlook: Key focus area for future growth, serving underbanked and underserved customers.

Construction Finance

Portfolio has shrunk quarter on quarter, leading to a slight reduction in interest income. Disbursed about INR 280 crore this year.

Outlook: Continuing to sanction new cases but with increased caution, focusing on good locations, experienced developers, approvals, and marketability. Funding small-sized developers (average ticket size INR 8 crore) where underlying units are still moving.

Competitive Position

Capri Global operates in a niche segment serving borrowers without complete income proof or whose income is not fully reflected in bank statements. This segment has a significant credit gap, and while some regional players exist, competition is not as intense as the available opportunity. The company has developed expertise and a niche in this space.

Strategic Initiatives

  • Cost rationalization: Rationalized branch network, consolidated non-productive branches, realigned manpower, and improved productivity, leading to a reduced cost-to-income ratio.
  • Liquidity management: Built and maintained a strong liquidity position with INR 450 crores in undrawn credit lines.
  • Risk management: Implemented a strong risk management framework, ensuring collateralized and well-secured loans.
  • Profitability focus: Focused on improving margins and maintaining asset quality.
  • Organizational agility: Strengthened systems and processes to create a leaner and agile organization.
  • Diversification of funding: Approved for securitization and co-origination to diversify borrowing mix, with securitization expected to be 20% of total borrowing.
    • This is an AI-generated summary of a publicly available earnings call transcript.
    View original transcript

    More Financial Services earnings calls