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Capri Global Capital Limited Q1 FY25 Earnings Conference Call Summary
Communication Details • Date of communication: August 12, 2024 • Transcript shared with BSE and NSE • Call held on: August 6, 2024 • Signed by: Company Secretary Yashesh Pankaj Bhatt • Disclaimer included regarding earnings performance and associated risks
Key Highlights from the Call • Management Representation: • Managing Director Rajesh Sharma provided opening remarks.
• Financial Performance: • 56% year-on-year increase in Assets Under Management (AUM) to INR 174,579 million. • 109% year-on-year surge in disbursements. • Net interest income: INR 3,013 million (18% increase quarter-on-quarter). • Consolidated net profit: INR 757 million (19% increase year-on-year). • Stable non-performing asset ratios despite increased credit costs.
• Strategic Focus: • Emphasis on retail lending, particularly in MSME, housing, and gold loans. • Growth in co-lending segment, now 16.4% of AUM. • Technological initiatives aimed at operational efficiency and customer engagement.
• Diversification and ESG Commitment: • Plans to diversify income streams, including insurance distribution. • Ongoing efforts to integrate ESG practices and obtain ratings from global agencies.
Key Inquiries and Responses • Insurance Business: • Insurance income for the quarter: INR 120 million. • Partnerships with 11 insurance companies.
• Return on Equity (ROE): • Expected ROE for FY25: 10.5% to 11%. • Target ROE by FY27: 15%.
• Gold Loan Business: • 18% increase in net interest income driven by gold loans. • Plans to add 50 gold loan branches in the coming year.
• Loan Composition and Borrowing Costs: • Yield on advances increased from 15.6% to 16.3%. • Cost of borrowing: 9.3% to 9.6%.
• Expansion Plans: • Focus on North and West regions for gold loan business. • Acknowledgment of competition from PSUs.
• Asset Impairments: • Recent write-offs primarily technical; recovery expected at 80-90%.
• Micro LAP Segment: • Distinct from MSME business, targeting smaller loans with higher yields. • Guidance for AUM: INR 300,000 million by FY27.
Conclusion • Rajesh Sharma expressed confidence in achieving significant growth in MSME, gold loans, and housing finance. • Anticipated AUM growth from INR 200,000 – INR 210,000 million in FY25, reaching INR 300,000 million by FY27. • Call concluded with a note for follow-up during Q2FY25 results.
Capri Global Capital Limited Q4 FY24 Earnings Conference Call Summary
Transcript Availability • Transcript from Q4 FY24 Earnings Call on May 10, 2024, available for stakeholders. • Management team present: • Mr. Rajesh Sharma (Managing Director) • Mr. Partha Chakraborti (CFO) • Mr. Sanjeev Srivastava (CRO) • Document includes disclaimers on earnings interpretation and has been edited for clarity.
Key Developments • Appointment of Shri L. V. Prabhakar as Chairman. • Approval of a 15% dividend on newly split equity shares. • Assets under management (AUM) reached INR 156.5 billion, a 50% year-over-year increase. • Gold loan segment grew 3.1x, contributing 37% to AUM. • Strong performance in MSME and housing finance segments.
Financial Performance • Net interest income increased by 36% year-over-year. • Non-interest income rose by 25%. • Net profit reported at INR 826 million, a 27% increase. • Improved asset quality with a gross non-performing asset (GNPA) ratio of 1.92%.
Technology and ESG Initiatives • Emphasis on technology and ESG for operational efficiency and sustainability. • Confidence in adapting to new RBI regulations on gold loans.
Q&A Highlights • Inquiry on gold AUM: Cash disbursements ceased, but volumes stable. • Strong demand in affordable housing projected to grow by 30%. • Anticipated 20% growth in car loans for FY25, with a new used car finance vertical. • Cost of funds expected to stabilize; no spread contraction for new lending. • Focus on semi-urban and rural lending with unique underwriting approaches.
Risk Management and Compliance • Training initiatives for staff regarding gold loan quality and RBI compliance. • Assurance of compliance with recent regulatory changes in housing finance.
Future Outlook • Anticipated growth in secured lending sectors: MSME, home loans, and gold loans. • Expected improvement in net interest margins (NIM) from 6.4% to 6.8-6.9%. • Optimism for high growth and improved cost-to-income ratios in the upcoming year.
Capri Global Capital Limited Q3 FY24 Earnings Conference Call Summary
Transcript Availability • Transcript from January 31, 2024, earnings call available. • Edited for clarity with factual corrections. • Moderated by Ravikant Bhat, highlighting risks and uncertainties.
Key Updates from Rajesh Sharma, CEO • Board Approvals: Stock split and 1:1 bonus issuance pending shareholder approval. • New Appointments: Three independent directors with expertise in finance, technology, and ESG. • Subsidiary Launch: New subsidiary focused on car loans and insurance distribution.
Financial Performance • Growth Metrics: • 54% YoY growth in Assets Under Management (AUM). • 113% increase in disbursements for the first nine months of FY24. • 235% YoY increase in Gold Loan AUM. • Profitability: • Net profit of ₹680 million, an 82% YoY increase. • Improved cost-to-income ratio and focus on provision coverage.
Technology and ESG Initiatives • Technology Focus: Revamping systems, enhancing collections, and analytics-driven decision-making. • ESG Framework: Ongoing updates on ESG assessment progress.
Gold Loan Business Insights • Break-even Analysis: ₹30 million business needed per branch; 313 out of 747 branches meeting this target. • Cross-selling Opportunities: Insurance policies can be sold through Gold Loan branches, projecting ₹300 million in premium income. • Profit Projections: Anticipated profitability in Gold Loan business next year with expected profits of ₹400-500 million.
Growth Projections • Gold Loan Growth: 250% YoY increase in AUM; expected growth of 50-60% next year. • Cost Management: Strategies to protect margins and improve spreads.
Regulatory and Market Insights • RBI Regulations: Slight increase in cost of funds manageable for customers. • Loan Rejection Rates: 60% rejection ratio across segments.
Future Outlook • Financial Projections: ROA and ROE for FY25 projected at 2.75%-3% and 11.5%-12%, respectively. • Co-lending Partnerships: Key partners include Yes Bank and State Bank of India; confidence in regulatory support for co-lending.
Conclusion • Optimism for FY25 with expectations of improved income and earnings.
Capri Global Capital Limited Q2 FY24 Earnings Conference Call Summary
Notification and Transcript • Date of notification: November 9, 2023 • Revised transcript of Q2 FY24 Earnings Conference Call held on November 2, 2023 • Initial announcement made on October 28, 2023 • Transcript includes: • Edited content for clarity • Factual corrections • Abbreviated recurring terms • Key management present: Founder & Managing Director, CFO, CRO • Emphasis on caution in interpreting results due to risks and uncertainties
Financial Highlights • Disbursals: • Increased 130% YoY and 31% QoQ to ₹35.3 billion • Driven by Gold and Housing loans • Assets Under Management (AUM): • Grew 59% YoY to ₹123.6 billion • Gold Loans represent an increasing share • Net Profit: • Rose 16% YoY to ₹652 million • Supported by a 63% increase in net interest income • Challenges: • Spread compression due to rising costs and competitive pressures • GNPA ratio increased slightly to 1.93% • Proactive provisioning improved PCR to 32.3%
Future Outlook • Optimism for H2 FY24 with anticipated improved profitability • Gold Loan business expected to approach break-even • Earnings projected to grow faster than operating expenses
Strategic Plans • Provision Coverage Ratio (PCR): • Target to increase from 32.2% to 37%-40% • Gold Loans: • Expected growth from ₹20 billion to ₹30 billion by March 2024 • Projected annual growth rate of 30%-35% over the next two years • Co-lending Segment: • Target of 20% of the ₹30 billion book being co-lent • New Subsidiary: • Capri Loans Car Platform to enhance car loan business focus and technology
Cost Management and Growth Strategy • High cost-to-income ratio at nearly 50% due to increased digital spending • Investments in technology and a 125-member tech team • New technology platform launching in April 2024 to improve productivity and reduce costs • Growth strategy includes: • Expanding branch distribution • Enhancing fee income through insurance and car loans • Confidence in profitability and asset quality, positioned to benefit from economic growth
Capri Global Capital Limited Q2 FY24 Earnings Conference Call Summary
Key Financial Highlights • Disbursals: Increased by 130% YoY to INR 35.3 billion, driven by Gold and Housing sectors. • Assets Under Management (AUM): Grew 59% YoY to INR 123.6 billion. • Net Profit: Increased by 16% YoY to INR 652 million. • Net Interest Income: Rose by 63% YoY. • Gross Non-Performing Assets (GNPA) Ratio: Reported at 1.93%. • Cost of Borrowing: Expected to rise in H2 FY24.
Management Insights • Yield on Advances: Decreased from 15.7% to 15.6% due to prepayments in Construction Finance. • Gold Loan Segment: Anticipated growth to improve overall yields; sustainable spread of 6.6% expected for H2 FY24. • Cost of Funds: Market-driven with slight increases expected due to MCLR resets. • Provision Coverage Ratio (PCR): Targeting 37% to 40% over time.
Growth Projections • Gold Loan AUM: Projected 30% to 35% increase over the next two years without new branches. • Co-lending Strategy: Expected increase in co-lending, particularly in the gold loan segment, targeting 20% of a projected INR 3,000 crore book.
Operational Developments • New Subsidiary: Capri Loans Car Platform established to enhance car loan distribution and profitability. • Digital Spending: Increased costs contributing to a high cost-to-income ratio, with expectations for improvement by September 2024.
Outlook • Overall Sentiment: Optimistic about growth, profitability, and maintaining asset quality amidst economic growth, with a positive outlook for disbursements in Tier 2 and Tier 3 towns despite inflation challenges.
Capri Global Capital Limited Q1 FY24 Earnings Conference Call Summary
Notification and Participants • Date of notification: August 14, 2023 • Conference call date: August 8, 2023 • Key participants: • Mr. Rajesh Sharma (Founder & Managing Director) • Mr. Ravikant Bhat (Sr. VP of Investor Relations) • Transcript edited for clarity and factual corrections
Financial Performance Highlights • Disbursals: • 128% YoY increase to INR 26.9 billion • 5% typical seasonal decline quarter-over-quarter • Gold Loan Vertical: • 51% of total disbursals • Expected profitability by end of FY24 • Assets Under Management (AUM): • 61% YoY increase to INR 112.3 billion • Gold Loans projected to reach INR 30 billion by year-end • Net Profit: • 38% YoY increase to INR 636 million • Driven by 77% YoY rise in net interest income • Net Interest Margin: • Stood at 9.6% • Gross Non-Performing Assets (GNPA): • Ratio of 1.89%
Strategic Insights • MSME Yields: • 60% of MSME customers experienced a 50bps increase in long-term reference rates • Incremental lending yield at approximately 15.5% • Gold Loans Competition: • Increased competition from public sector banks • Focus on higher ticket sizes for growth • Growth Targets: • Aiming for AUM of INR 10,000 to 12,000 crores in 5-7 years • Plans for branch network expansion
Construction Finance Strategy • Policy: • No financing for under-construction projects • AUM Distribution: • 20% in Construction Finance, 80% in secured retail loans • Project Completion: • Consistent completion rate, with a third finishing within 12 months
Asset Quality and Market Demand • NPA Management: • Decline in gross and net NPAs • Provision Coverage Ratio (PCR) at 28-30% • MSME Demand: • Strong demand projected to grow over 30% in regions like Rajasthan and Madhya Pradesh • Construction Finance Concerns: • Deterioration attributed to a single restructured account
Future Outlook • Co-lending Partnerships: • Ongoing collaborations with several banks • Gold Loan Business: • Anticipated high profitability • Operational Efficiency: • Implementation of a core banking solution expected to enhance profitability in the coming year
Capri Global Capital Limited Q4 FY23 Earnings Conference Call Summary
Communication Details • Date of call: May 23, 2023 • Transcript shared with BSE and NSE on May 27, 2023 • Letter signed by Company Secretary Yashesh Pankaj Bhatt • Disclaimer regarding earnings performance and potential risks
Key Highlights from the Call • Significant Achievements: • Record disbursement of nearly INR 6,000 crores in car loans • Successful launch of a gold loan business • Raised INR 14.4 billion through a rights issue, increasing capital adequacy ratio to 40%
• Financial Performance: • Consolidated net profit of INR 2,047 million for FY23 • 42% year-over-year increase in net income • 55% rise in net profit for Q4 FY23 • Lending yields improved, particularly in gold loans (averaging over 18%) • Non-interest income rose to 33% for FY23
• Future Growth Projections: • Targeting 30% growth in assets under management (AUM) for FY24 • Gold loans expected to represent 25% of overall AUM in 4-5 years • Overall AUM growth target of 35-40%
Strategic Insights • Home Loan Sourcing Strategy: • Increased average ticket size due to rising housing costs • Expansion into new cities
• Gold Loan Segment: • Reviewing digital lending partnerships due to RBI guideline changes • Acknowledgment of competition from banks and informal lenders
• Branch Expansion and Profitability: • Plans to pause branch expansion until existing branches achieve profitability • Aim for a cost/income ratio improvement to 45-50%
Additional Inquiries and Responses • Car Loan Distribution: • Generated INR 118 crores in revenue with INR 30-32 crores in profit • Partnerships with eight banks for lead referrals without balance sheet exposure
• Borrowing Mix: • Primarily using term loans from public sector banks, minimal non-convertible debentures
• MSME and Housing Finance Growth: • Continued growth in average ticket sizes and account numbers • No additional capital needed for the next 6-7 years if co-lending initiatives succeed
Conclusion • Focus on underserved segments, strong distribution, and investment in collections • Projected growth of 35-40% in the coming years with improved margins and return on equity
Capri Global Capital Limited Q3 FY23 Earnings Conference Call Summary
Notice Submission • Date: February 4, 2023 • Submitted to: BSE and NSE • Purpose: Transcript of Q3 FY23 Earnings Conference Call held on January 30, 2023 • Disclaimer: Discussion subject to risks and uncertainties; not a verbatim account
Key Participants • Rajesh Sharma: Founder & Managing Director • Ravikant Bhat: Sr. VP of Investor Relations
Financial Performance Highlights • Net Profit Decline: Significant drop attributed to gold loan segment costs • Assets Under Management (AUM): Increased by nearly 50% YoY • Retail Loans: Notable growth in disbursals, especially in gold loans • Operating Expenses: Increased, leading to a higher cost-income ratio
Earnings Insights • Net Interest Income: Rose, but margins pressured by loan repricing delays • Non-Interest Income: Increased due to car loan fees and co-lending income • Credit Costs: Up, but asset quality stable with expected recoveries
Future Plans • Capital Raising: Plans for additional capital through a rights issue • Gold Loan Growth: Targeting INR 850 crores by Q4 FY23, aiming for 19% yield • AUM Mix Projection: Gold loans (25%), MSMEs (25%), Home loans (30%), Construction finance (20%) in 4-5 years
Operational Dynamics • Branch Costs: INR 2.5 to 3 lakhs monthly; breakeven at INR 3.5 crores AUM • Profitability Strategy: Focus on robust branch network and cross-selling financial products
Market Competition • Gold Loan Sector: Increasing competition, but overall market growth allows for expansion • Borrowing Costs: Manageable despite increases; emphasis on long-term bank loans
Co-Lending and MSME Focus • Co-Lending Growth: Engaged in INR 450 crores, expected to increase with tech integration • MSME Disbursals: Q3 disbursements at INR 286 crores; 25% growth expected for the year
Housing Loan Segment • Average Ticket Size: Currently INR 12-13 lakhs, potentially reaching INR 16-17 lakhs
Strategic Focus • Underserved Segments: Targeting MSME and affordable housing markets • Technology Investments: Ongoing efforts to improve asset quality and operational efficiency
Conclusion • Confidence in achieving better returns for stakeholders through strategic growth and operational improvements.