Choice International is bullish on Capri Global, expecting strong loan growth and softening costs to lift ROE toward 18% by FY28 despite policy risks and gold price fluctuations.
What Makes Choice International Bullish on Capri Global’s Growth Outlook?
About Capri Global and Its Lending Model
Capri Global Capital Limited (CGCL) is a diversified non-banking financial company (NBFC) known for its balanced exposure across product categories and regions. It operates in both gold loans and MSME segments, each contributing around 18–20 per cent to its total book, while no single geography exceeds 22 per cent of exposure. This wide distribution helps CGCL maintain stability during cyclical market shifts.
Choice International’s Bullish View
Choice International has reiterated a Buy rating on Capri Global with a target price of ₹230, compared with the current market price of ₹189.60. The brokerage values CGCL using the Residual Income Approach and projects Return on Equity (ROE) to rise to 18.3 per cent by FY28, supported by rising income and falling cost ratios.
The research note highlights CGCL’s strong focus on retail-driven credit, advanced digital underwriting, and partnerships with 12 banks. These alliances enable high fee-based income without taking direct balance-sheet risks, giving the company a distinct edge in co-lending.
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Financial Performance and Growth Drivers
Capri Global’s cost-to-income ratio has improved sharply—from 65 per cent earlier to 46 per cent now—driven by efficiency in digital origination, data analytics, and underwriting. Its net interest margin (NIM) stands at a robust 8.9 per cent, aided by steady loan yields and diversified funding sources. Non-interest income contributes 28 per cent of total revenues, bolstered by insurance, channel origination, and co-lending fees.
The company’s in-house technology and 150-member team, including over 25 data scientists, drive scalable credit models that enhance operational quality. Choice International expects these initiatives to support loan expansion at a healthy pace through FY28.
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Valuation and Key Risks
Choice International’s valuation implies P/ABV of 2.9x/2.5x for FY27E/FY28E, justified by strong profitability trends and rising efficiency metrics. However, key risks remain: changes in co-lending policy, economic moderation leading to higher MSME delinquencies, and potential impact from gold price volatility. The brokerage, however, believes these risks are manageable given CGCL’s diversification and prudent underwriting.
Investor Takeaway
Indian-Share-Tips.com Nifty Expert Gulshan Khera, CFP®, who is also a SEBI Regd Investment Adviser, observes that Capri Global’s strategy of technology-led scalability and risk-controlled expansion positions it as a structural growth story in the NBFC space. He adds that consistent earnings visibility and cost optimization make the stock a potential outperformer in the medium term.
Related Queries
What Are the Key Drivers Behind Capri Global’s Expanding Loan Portfolio?
How Could Co-Lending Policy Changes Impact Capri Global’s Valuation?
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
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