Ladies and gentlemen, good day and welcome to the Capri Global Capital Limited Q3 FY25 Earnings Conference Call hosted by Go India Advisors. As a reminder, all participant lines will remain in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal the operator by pressing star, then zero on your touch-tone telephone. Please note that this conference is being recorded. I now hand the conference over to Mr. Hardik Doshi from Capri Global Capital Limited. Thank you, and over to you, sir.
2025 Earnings Call for Capri Global Capital Limited. This is Hardik Doshi, Head of Corporate Finance and Investor Relations. As a brief disclaimer, the discussion on today's call regarding Capri Global Capital Limited's earnings performance will be based on judgments derived from the declared results and information regarding business opportunities available to the company at this time. The company's performance is subject to risks, uncertainties, and assumptions that could cause results to differ materially in the future. Given these uncertainties and other factors, participants on today's call may observe due caution while interpreting the results. The full disclaimer is available on slide 42 of the earnings presentation. Participants are requested to take note of the same. Let me now introduce the participants on the call. With us today on the call, we have Mr. Rajesh Sharma, Managing Director of the company; Mr. Partha Chakravarty, Chief Financial Officer; Mr.
Sanjeev Srivastava, Chief Risk Officer, Ms. Divya, Director of Business Strategy, Rajneesh Singhvi, Financial Controller. I now request our Managing Director, Mr. Rajesh Sharma, to present the opening remarks. Thank you, and over to you, sir.
Good morning, everyone, and I hope you all are doing very well. We declared our unaudited financial results for Q3 FY25 on 23rd June 2025, and I hope you had a chance to go through the earnings presentation, which is available on our website. As you all know, we continue to serve underpenetrated and unbanked customers in high-growth segments with substantial untapped market potential while maintaining a strategic focus on building a retail franchise to secure loan books. We are a diversified NBFC with presence in MSME loans, housing loans, gold loans, and construction finance. We continue to further diversify ourselves by expanding our product offering. In the last quarter, under our MSME loan segment, we launched Micro LAP, a small ticket secured loan product for self-employed customers, and launched rooftop solar loans.
In addition to growing our interest income, we are also focusing on increasing share of fee income through insurance distribution and car loan origination. We continue to invest in technology as we believe that our digital-first approach and superior technological processes will be the key differentiator, enabling us to serve our customers better and faster than our peers. I shall now move to the commentary on business and earnings performance. Please refer slides 3, 4, 5, and 6. We maintained strong growth momentum in Q3 FY25 with our AUM reaching INR 20,663 crores, an increase of 54.6% year-on-year. This growth was primarily driven by a growth of 196% year-on-year in gold loans and 31% in housing loans. In addition, our Micro LAP segment has already touched AUM of INR 157 crore in two quarters. Our disbursement touched INR 5,839 crore during the quarter, reflecting a 52% year-on-year growth.
Our retail AUM constitutes over 80% of our portfolio. Our co-lending AUM continued to surge during Q3 FY25 and stood at INR 3,681 crore, comprising 17.8% of AUM compared to 8.9% in Q3 FY24. We have further strengthened our relationship with nine bank partners, increased co-lending lines, and the acceptance ratio of the loans compared to a year ago. We expect to continue this momentum in co-lending as an efficient tool for high ROE accretion and liability management. We continue to build a well-diversified portfolio for our MSME and housing loans. With average ticket size of INR 20 lakhs, our MSME AUM, including Micro LAP loans, reached INR 4,926 crore, up by 4% year-on-year, and our housing loan segment AUM reached INR 4,586 crore, up by 31% year-on-year. MSME and housing finance together continue to constitute 50% of our overall AUM.
With our plans to open new branches for these segments and focus on underserved markets, we are confident that our MSME and housing loan portfolios will deliver robust and sustainable growth in the coming quarters. Our gold loan AUM increased by 196% year-on-year to cross INR 7,092 crore, supported by our extensive gold loan branch network of 776 branches across nine states and union territories. These branches are scaling up and have achieved a productivity level of INR 9.1 crore AUM per branch, with over 65% branches having reached the vintage of more than INR 5 crore AUM per branch. We are confident that our expanding reach and co-lending partnership will continue to fuel sustainable growth and further strengthen our position in the gold loan segment.
Our construction finance AUM increased by 65% year-on-year to cross INR 3,742 crore, driven by strong demand in the real estate sector and pipeline of new affordable housing projects. Our disbursements in construction finance for Q3 FY25 stood at INR 822 crore, up 51% year-on-year. We continue to maintain a granular book in our construction finance segment with over 287 projects and average portfolio ticket size of INR 13 crore. In construction finance, our focus will remain on residential projects within the affordable housing sector and smaller projects. Now, as regards earnings performance, let me now provide an update on our core earnings. Our yields and spreads expanded further in the quarter to 16.7% and 7.3% respectively, primarily on account of increase in yields for housing finance to 12.9% and gold loan to 20.6%.
Our net interest income for Q3 FY25 reached INR 347 crore, marking a 42% year-on-year increase, and for nine months FY25 reached INR 953 crore, marking a 30% year-on-year increase driven by margin expansion and robust growth in our loan books. We continue to focus on non-interest income, with a share in total income at 25.1% in nine months FY25. Our non-interest income comprises of three components: car loan distribution fee, co-lending income, and insurance income. Our non-interest income was INR 319 crore in nine months FY25, up by 20% year-on-year, supported by co-lending fee income of INR 112 crore, net car loan origination fee of INR 72 crore, and net fee income from insurance of INR 39 crore.
We have scaled our car loan origination network within a very short period, and now a meaningful player in this segment with pan-India presence across 811 locations in 31 states and union territories and 12 partner banks and financial institutions. Our car loan origination in Q3 FY25 was INR 2,972 crore, up by 16% quarter-on-quarter and 5% year-on-year. On the insurance distribution front, we are tied up with 18 insurance companies and expected to generate more than INR 60 crore of net fee income for FY25. We anticipate this strong foundation will sustain the impressive growth trajectory of our non-interest income. As a result, our total income for Q3 FY25 was up by 30% year-on-year and nine months FY25 up by 28% year-on-year. Our branch network expanded to 1,066 branches in Q3 FY25, and employee base increased to 11,022, up by 13% year-on-year.
We opened 70 new branches exclusively for our Micro LAP segment. Following our significant investment in branch expansion over the past three years, we are now focusing on bringing more efficiency and productivity, the effect of which has already started to reflect in our cost-to-income ratio, which improved to 58.3% in Q3 FY25, down from 64.3% in Q2 FY25 and down from the peak of 70.5% in Q4 FY24. We expect further reduction as we see benefits of operating leverage accrue in coming quarters. As a result, our pre-provisioning operating profit increased significantly to INR 189 crore for Q3 FY25 and INR 480 crore for nine months FY25, up by 46% year-on-year and 39% year-on-year respectively.
As regards asset quality, our credit cost for Q3 FY25 was INR 18 crore, a modest increase of 4.8% quarter-on-quarter, whereas for nine months FY25, it declined by 62.5% year-on-year and was INR 82 crore, which translates to 0.7% of loan book. Gross stage III ratio stood at 1.7% and net stage III ratio stood at 1% in Q3 FY25, an improvement of 40 basis points year-on-year in both. We continue to maintain healthy PCR on stage III loans of 39.4% in Q3 FY25. As regards capital and capital adequacy and liquidity position, we continue to maintain a strong liquidity position of more than INR 2,000 crore through cash and cash equivalents and undrawn credit lines across CGCL and CGHFL. During Q3 FY25, we got new credit lines of INR 1,025 crore sanctioned for CGCL and CGHFL.
Our capital adequacy ratio for both CGCL and CGHFL remains strong and stood at 22.9% and 29.3% respectively. As regards profitability, our efforts over the past two to three years to diversify our business income stream is now yielding results as seen in Q3 FY25 performance. Our consolidated net profit saw strong increase and stood at INR 128 crore for Q3 FY25, up by 88% year-on-year and 32% quarter-on-quarter, whereas our profit for nine months FY25 stood at INR 301 crore, up by 53% year-on-year. We reported an annualized return on average asset of 2.8% and an annualized return on average equity of 12.6% on Q3 FY25, up by 0.5% and 2.8% quarter-on-quarter respectively. We expect this to continue to improve going forward.
As regards technology, our technology initiative, including our in-house developed LOS, Flexcube, LMS, Pragati Sales App for customer onboarding, Collect Express App for managing collections, and Capri Grahak App for customer engagement, are now extensively used by our sales and collections staff for managing the customer loan journey and end-to-end digitally, and is helping them further improve their efficiency and productivity. We continue to refine our data science-based business rule engine and underwriting score cards, which will help us with better customer risk profiling and selection and offer risk-based pricing, thus improving our login-to-sanction ratio. This, in combination with our detailed collection dashboard for real-time monitoring and AI/ML models for identifying early delinquencies, will help us monitor our collection efficiency and asset quality. Lastly, our focus on real-time system and driving improvement in tech enabling us to meet our customer expectation faster through hassle-free and timely disbursement digitally.
As regards ESG, Capri Global has established a robust ESG framework, aligning our policies with international standards and ESG guidelines. During the quarter, we also secured S&P Global Corporate Sustainability Assessment score of 49, exceeding the industry average of 30. On the financial inclusion parameter, we secured a score of 75, ranking us in the 99th percentile of the industry. Additionally, we published our business impact report because of progress, highlighting our achievement in financial inclusion and sustainable growth. With that, I conclude my opening remark. We shall now take questions.
Thank you. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use their handsets while asking a question.
Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Satyaprakash Pandey from Haitong Securities. Please go ahead.
Hi. Am I audible?
Yes, please go ahead.
Yeah. So my question is, the MSME AUM presented includes a small business loan and micro loan. Could you provide a detailed breakdown of this AUM? Additionally, why has the MSME loan book not grown at the same pace as other segments? What measures are being planned to enhance its growth? Yeah, this is my question.
So as regards our MSME, which comprises of MSME secured by collateral, small business loan, and also Micro LAP. So Micro LAP is only INR 157 crore. Small business loan is about INR 42 crore, and MSME is about INR 4,769 crore. This segment will start showing better growth in next year because we'll be adding more branches here.
And our Micro LAP, which is now 70 branches, will also start adding the numbers. So combination of both, addition of the branches and more focus on Micro LAP from now going forward in terms of the growth, and the growth will be back in MSME segment also. We will start showing the growth next year only.
Okay. Thank you. That's really helpful.
Thank you, Satyaprakash.
Thank you. The next question comes from the line of Kushagra Goel from CLSA. Please go ahead.
Hi, team. Thanks for taking my question. Hello.
Yes. You're audible, please. Go ahead.
Yeah. So congrats on a good set of numbers. So I have two questions. One is just around your gold loan portfolio. So I'm seeing that the LTV is quite high, around 71%-72%. So I just wanted your thoughts regarding this.
Is that a concern area, and what happens if in case Gold Loan prices drop? So if you could just give some color regarding that.
So Gold Loan portfolio, if you see the maximum permissible LTV is around 75%, and the competition also all the LTV in the range of 71%-75% only. Being gold is very liquid, I think these are very healthy levels of the LTV level. And even with the auctions and the NPA cases, you are able to recover fully. So these are very safe LTV levels across industry. Everybody operates in these range.
Okay. Okay. Sure. My second question is regarding your borrowing. So can you just tell us what is the mix of fixed and floating rate borrowing?
Also, if you could share your expectations as to how cost of funds will move in the next three, four quarters and if there are any plans to diversify your borrowing? That's all.
All the borrowings except less than 5%, all the borrowings are on the floating basis. And similarly, we are able to pass on any floating rate increase also to our customers. So our borrowings, by and large, are in floating basis.
Okay. Okay. And do you expect them to have topped out in this quarter, or how do you see that moving?
We expect our interest rate cycle should not go up. At the best, it might remain here for some time before it starts falling down again. But we don't expect the interest rate to go up.
Got it. Okay. Thank you.
Thank you. The next question comes from the line of Akshat Maniar from Anand Rathi.
Please go ahead.
Hello. Hi, sir. Thanks for the opportunity. Am I audible?
Yes.
Sir, so my first question was on the lines of co-lending AUM. So what are your expectations going forward, especially seeing very good growth momentum? And what are the current structure arrangements of the co-lending that you have with the banks?
So we have co-lending partnerships with all our three products, MSME, affordable housing, and the Gold Loan. And we are working with almost nine banks where different products are partnered with them. Currently, about 18% AUM is under co-lending, and we should be able to maintain at that level. So co-lending will be in the range of about 18%-20% kind of going forward as well. And banks are quite comfortable. So I think these limits we keep getting. We will see whether we can increase it slightly.
But even though these are very healthy levels, if we can maintain it, it concerns our capital. And our ROE is very, very high in the co-lending segments.
Okay, sir. And my second question will be on the last segment that you just entered. So what are your key takeaways from this segment, and how do you plan to use it to basically broaden into the rural areas?
So there are two aspects of it. One, we launched 70 branches to start the Micro LAP because we are always doing MSME. The next level of expansion will be our existing MSME branches, which are in the range of 150+ . Within that, we'll identify which are the branches we can start the co-lending at this Micro LAP also. So those branches, we just need to put the team, and we'll save the cost there.
So next April onwards, we are going to make a plan to start Micro LAP in those branches. Besides other expansion in the Micro LAP, the advantage here is the yield is good. And within our ecosystem of overall super aggregate level technology in place, cost basis, cost-to-income ratio, it will be much better. Cost will be lower when we combine it with our existing MSME branches. So overall, it will fit into our scheme of things of the collateral lending to those customers who are not serviced by the bank. So we believe that this will be next four to five years will give us a good growth and also a high-yield product along with the security.
And sir, lastly, if you could provide some insight on the competitive intensity and the macro environment that we are seeing a slowdown in the sector.
So if we see competition-wise, I think retail lending business will always have a competition. It has a competition yesterday. It is going to be tomorrow also. But this will drive on efficiency, operational efficiency, coupled with, backed by technology and data science capabilities. And that is where we are investing. Only way to create the difference is how do we are able to achieve the better turnaround time, how do we are able to predict the better asset quality, how do we automate the lot of processes so we reduce the dependence on manpower, and also requirement of the people are gone down, productivity is higher. So with all these measures, I think within the competition also, we should be able to do well. If you see our trend, our growth is coming.
And now, quarter after quarter, if our cost-income ratio goes down, you will see significant upstick in the ROE as well.
Okay, sir. Thanks for taking my question.
Thank you. Ladies and gentlemen, if you wish to ask a question, please press star and one. The next question comes from the line of Sohail from ULJK Group Financial Services. Please go ahead.
Good afternoon, everyone. Thank you for this opportunity. And I wanted to ask a question about what's happening at the ground level with the loan collection officers. Perhaps you could give some light on the attrition rate over there. Hello? Am I audible?
Yes, yes. So your question is related to the attrition in the team member of the collection team.
Our collection team is quite stable in the sense on the ground, and because we have good collection efficiency, good technology, and also the incentive plan, so it is less than 20%.
I see. And I had another question regarding the construction finance book. Lately, we have seen a huge growth in this segment. But previously, we had faced a lot of defaults in this segment. Any particular steps you are taking to keep this from happening again?
First of all, our construction finance is also done in a very retail way. Our average ticket size is INR 13 crore on a disbursement basis. And if you see, our INR 3,700 crore portfolio is spread across 275 plus customers. It is not that we are giving INR 200-300 crore sanctions. Most of the sanctions are less than INR 25 crore. These are smaller projects.
Plus, in any case, real estate sector is doing well. Demand of housing is doing well. So we are seeing that sales are happening. And this segment is offering a low operating cost, a good profitability model. Now, it's more than 12 years we are doing it. And even including the few write-off, our yield is very, very high, even though we account those losses. And hardly, we have seen any delinquency. Collectively, in the last 10, 12 years, we don't have seen the NPA more than INR 250 crore when we would have lent more than INR 12,000 crore. So it is a very strong, stable team we have and very deep ground understanding we have.
Perfect. Perfect. That answers my question. Thank you.
T hank you. The next question comes from the line of Shalin Kapadia from IIFL. Please go ahead.
Hi, sir. Thank you for taking my question.
I only have one question. We have heard from some of the competitors that they have started offering gold loans as EMI-based product with monthly EMIs. Is this something that you have also heard from regulators and is mandatory to apply? And also, if it is so, then how does it impact your growth or asset quality? Thank you.
Gold loan always has various schemes, including monthly repayment. That is not something new. Neither there is any direction from regulator. However, regulators never say what should be your product. Regulators always say your compliance are A, B, C, D you're doing. How you divide your product, they don't guide us. There's no instruction or circular on that as such.
Okay. Thank you, sir.
Thank you. The next question comes from the line of Rohit Shinde from MARKET MEMORIES WEALTH ADVISORS LIMITED.
Please go ahead.
Good afternoon, Rajesh Sharma ji. Good afternoon, team Capri Global. Am I audible? Yes, sir. So, sir, my first question is, with a target of 30,000 crore AUM by FY 2027, what strategic initiatives are being prioritized to achieve this milestone? Can you share your guidance for asset quality and profitability as well? And which segment or geographies do you expect to drive growth in the near term?
So, there is no catch that we are not focusing growth without being mindful about the asset quality. Asset quality, we intend to keep net NPA not more than 1%, and that's the philosophy we'll continue to do. In regards to the growth from where it will come, the growth will continue to come from our existing segment of Gold Loan, MSME, Micro LAP, construction finance, affordable housing. Now, for the further growth, we'll add a few more branches.
With that, I think from INR 20,000 crore to INR 30,000 crore reaching, it should not take us a longer time. You can guess the kind of growth we are growing. It should be achievable. More than that, market offers that opportunity. There is a huge gap still there, and there's a big addressable target market in these segments. Yeah.
Sir, the second question is, as you transition towards becoming a technology-driven NBFC, can you share some recent advancements or digital initiatives aimed at improving customer experience and streamlining operations? How is technology being utilized to expand the region to rural and underserved markets, sir?
I wanted to say that we are indeed a technology-led NBFC while we operate in the segment which are in an informal segment. Our all processes are digitized and automated. Even in the gold loan, I just want to take two minutes.
When the customer walks in our branch, he has to just bring the gold ornaments, and no paperwork is required. He is onboarded with his Aadhaar, OTP, or face recognition. His PAN is verified, and once he offers the ornament, we do the weight of the ornament and check the purity, ask the customer to download our app, and customer is given the colored photograph through the app of his ornament along with the weight and the most important terms and conditions, including date of purchase, etc. Once he says he's agreeable, whatever scheme he wanted to choose in, we send him the OTP-based agreement, which he signs through OTP, and then the amount is disbursed in his bank account or the payment wallet or wherever he wants, so there's no, zero paperwork involved, even in a INR 30,000 rupee loan taken by a person who doesn't know how to sign.
So that way, we have gone very deeply. And because of this automation across affordable housing, MSME, and everything, our growth is doing better. We are doing better than the competition. Plus, our data analytics team is able to now predict the customer behavior in terms of not only for the repayment, but also what kind of customer target and which category we should service. So definitely, technology is the way forward. And this is not a one-time. This is an ongoing basis. We have set up a tech center, which is in Gurugram. We have 125+ engineers and 25 data scientists. Our data scientists are across Bangalore, Pune, Bombay, and Delhi. So we are building that up, and it's going to be a regular feature. This is not one-time. So we keep enhancing our offering for our team and our customer.
Going forward, our turnaround time, which has come down in all the segments, will continue to outsmart, outperform the competition, as well as it will improve the productivity, thereby bringing our cost-to-income ratio much lower in the size of better productivity.
Sir, in your goal to develop a INR 1,000 crore loan book in rooftop solar financing, could you elaborate on your collaboration with Credit Fair, which we did previously, sir? And how will this partnership enhance the speed of loan approvals and disbursements within the solar financing sector?
INR 1,000 crore AUM is not the target for one year. INR 1,000 crore target will be in the period of next four years or so. And it will be governed by the government subsidy scheme. So far, government subsidy scheme will remain. There will be a strong demand for this product.
Having government focus on the renewable energy and where the subsidy is up to 75%, I think there's a great demand here. We have now launched the pilot product. And now we will scale this in the coming year. And we will see how fast this grows. So this is a part of the MSME in any case.
And, sir, finally, a small question is regarding your advertising and marketing expenses. So what was the budget you had for this fiscal year? And how much is it remaining? And is there any going ahead for the next few months or next year, any basically color you can throw on the advertising and marketing expenses? Hello?
Yes, yes, yes. Sir, give us a minute. Sorry, sorry. Extremely sorry.
So we have a budget of about INR 15 crore for marketing, which comprises of radio, which comprises of hoarding, which comprises of newspaper, which comprises of the media. So combination of this, INR 15 crore is our budget. And till nine months, we already spent about close to INR 10 crore.
Thank you very much, sir. And wish you all the best.
Thank you.
Thank you. Ladies and gentlemen, if you wish to ask a question, please press star and one. The next question comes from the line of Dr. Pradeep Kaushal from Royal Global University. Please go ahead.
Hi. Good afternoon to the panel. Hello?
Yeah. Good afternoon, please. Go ahead.
Yes. So in the beginning of your presentation, you told that you are going to focus less on the opening big branches. Rather, you will focus more on the business.
Can you elaborate on this particular point you made in the beginning?
So now we have 1,066 branches. Our branch expansion will happen across MSME, affordable housing, Gold Loan, and Micro LAP. And when you want to grow, the growth will come from existing branches and also entering the newer market. So next year's plan, we will plan by March. And then from June onwards, we'll start adding the branches. So far, we have not firmed up how many exact branches we'll be opening. But definitely, about 100-150 branches we intend to open. But that plan yet to be firmed up in exact numbers. So what I suppose, sir, from the words spoken by you just now, that you are going to open maybe 100-200 branches per year for the coming years? So next year, yes.
Next year, we are going to open anything between 100-200. But we make our budget in the month of February until mid-March, we finalize when we keep our meeting with all the business heads internally and go to the board for that. So that exercise is still pending to arrive at exact number. But yes, every year, if you see our past track record, we kept adding branches year after year.
Okay. Okay. That sounds great. And I want to know that what is the reason behind such a kind of a strategy and how it is going to impact the profitability in the future?
So branches, when we open, we have to grow, then we have to add more branches and enter the newer markets. And the branches, depending on product to product, initially, they take some time to break even.
Some MSME branches take three-to-six months, and Gold Loan takes about 12-15 months, and after they start contributing, they start adding to the profits.
Okay. Okay. Thank you so much. Thanks for the answer.
Thank you. Ladies and gentlemen, a reminder. If you wish to ask a question, please press star and one. As there are no further questions, I now hand the conference over to the management for their closing comments.
so as we look ahead, we see significant market potential across all our business segments: MSME, Micro LAP, housing, Gold Loan, construction finance. And CGCL continues to deliver industry-outperforming growth while expanding our spread. We will keep investing in artificial intelligence and data science capabilities and empower our sales staff with the latest digital app, which will help them serve our customers faster and with better cost efficiency.
Given all our book is secured and granular, we feel quite comfortable of keeping our credit costs and asset quality under control. On the liability front, we continue to deepen our lender relationship and feel comfortable of securing additional credit lines with better pricing. We remain confident of achieving our earlier guidance of INR 30,000 crore AUM by FY 27 and delivering mid-teen ROE by then. Thank you. And we look forward to seeing you all again in fourth quarter FY 25 results calls. Thank you.
Thank you. On behalf of Capri Global Capital Limited, that concludes this conference. Thank you for joining us. And you may now disconnect your lines.