Capri Global Capital Q1 FY26: Unpacking 42% AUM Growth and a Bold Capital Play

Capri Global Capital Ltd (CGCL) has just unveiled its Q1 FY26 financial results, and the numbers tell a story of robust growth complemented by strategic financial maneuvers. As an expert financial analyst, I’ve delved deep into the investor presentation and official financial statements to bring you a comprehensive breakdown of what’s driving this Non-Banking Financial Company’s (NBFC) performance and what it means for the future.

While the Indian market witnessed a strong rally in Nifty and Sensex earlier in Q1, followed by a July correction due to cautious guidance and global uncertainty, CGCL’s results underscore the resilience and growth potential within domestic-focused sectors like financial services. Let’s explore how CGCL is navigating this landscape.

AUM Growth: Fuelling the Engines of Progress

For an NBFC, Assets Under Management (AUM) is akin to sales, indicating the core business expansion. Capri Global has truly delivered on this front, showcasing impressive growth.

The company’s consolidated AUM surged by a remarkable 42% year-on-year (YoY), reaching ₹247,538 million in Q1 FY26. On a sequential (quarter-on-quarter, QoQ) basis, AUM also posted a healthy 8% increase. This consistent upward trajectory is a clear sign of strong business momentum.

Let’s look at the segment-wise contribution to this growth:

• Gold Loans and Construction Finance emerged as the standout performers, demonstrating exceptional YoY growth rates of 68.5% and 60.9% respectively. This indicates strong demand in these segments.
• The continued expansion of Gold and CF loans, coupled with steady growth in Housing and MSME segments, highlights CGCL’s diversified and robust loan book.

Co-lending continues to be a crucial growth driver, with its share of overall AUM growing to 18.9% in Q1 FY26. This strategy helps in capital efficiency and expands reach. Furthermore, the Car Loan Origination business saw a significant 72% YoY increase in volume (number of loans), although the average ticket size decreased, possibly indicating a focus on broader market penetration with smaller loans.

These figures underscore CGCL’s prowess in capitalizing on the domestic growth themes that are currently favoured in the Indian market, particularly as global-linked sectors face headwinds.

Unpacking Profitability: A Mix of Surge and Strategy

At first glance, CGCL’s Profit After Tax (PAT) tells a story of extraordinary growth, but a closer look reveals the underlying dynamics, including a strategic capital infusion that impacted quarterly ratios.

Let’s dissect the key figures:

• Net Interest Income (NII) grew by an impressive 38% YoY, reflecting the robust AUM expansion. This is the bedrock of any NBFC’s profitability.
• Non-Interest Income also saw a strong 53% YoY jump, largely driven by co-lending income. The QoQ dip here is primarily due to a moderation in “Other operating income” compared to the previous quarter, which saw a surge.
• Perhaps the most striking highlight is the Operating Profit, which skyrocketed by 115% YoY and a healthy 23% QoQ. This stellar performance is a testament to the company’s tight leash on Operating Expenses, which grew by a mere 2% YoY and actually declined by 12% QoQ. This demonstrates exceptional operational efficiency.
• Consequently, the Cost-to-Income Ratio dramatically improved to 46.5% in Q1 FY26 from 64.6% in Q1 FY25 and 54.8% in Q4 FY25. This significant improvement is a key indicator of enhanced profitability and efficiency.

Now, let’s address the elephant in the room: the slight 2% QoQ dip in PAT, despite the strong operating performance. This isn’t a red flag, but rather a consequence of two key factors:

1. Increased Provisions: Total provisions surged by a staggering 341% QoQ, from ₹185 million in Q4 FY25 to ₹815 million in Q1 FY26. This significant jump in Expected Credit Loss (ECL) provisions, while impacting current PAT, suggests a prudent and proactive approach to managing asset quality.
2. Capital Infusion Impact on Ratios: CGCL raised ₹20 billion in equity capital via a Qualified Institutional Placement (QIP) during Q1 FY26. While this infusion massively strengthened the balance sheet, it temporarily diluted Return on Average Equity (ROAE) and Return on Average Assets (ROAA).
   • ROAE stood at 13.0% (down from 16.9% QoQ).
   • ROAA was 3.2% (down from 3.6% QoQ).

This is a classic case where a strategic capital raise, essential for future growth and regulatory compliance, can temporarily depress profitability ratios. However, given the strong operating profit and underlying business growth, this is a healthy, albeit temporary, dilution. For a company targeting aggressive expansion, this capital injection is precisely what’s needed. Based on this, CGCL firmly fits the profile of a Fast Grower, exhibiting strong fundamental revenue and operating profit growth, with a temporary dip in net profit ratios due to strategic funding.

Asset Quality: A Steady Hand Amidst Growth

Maintaining asset quality is paramount for any financial institution. CGCL has demonstrated a commendable performance here, ensuring that its rapid growth is built on a solid foundation.

The company’s overall Net Non-Performing Assets (NNPA) stood at a healthy 1.0% in Q1 FY26. While this is a marginal 10 basis points increase QoQ, it represents an improvement of 19 basis points YoY, reflecting better management over the past year.

Let’s look at the segment-wise NPA trends:

• MSME NNPA saw a slight increase QoQ, which will bear watching.
• Gold NNPA continued its improving trend, reaching 0.6%.
• Housing NNPA remained stable, while Construction Finance NNPA saw a marginal increase, though still at a low level.

Critically, CGCL has maintained a high Provision Coverage Ratio (PCR) of 96.0% (including aggregate ECL provisions), which is a significant improvement from 93.4% in Q4 FY25. A high PCR indicates that the company has adequately provisioned for potential loan losses, providing a strong buffer against future credit risks. The decreasing trend in restructured assets (0.4% from 0.5% QoQ) also points to improving portfolio health.

Fortifying the Foundation: Capital and Funding

The ₹20 billion equity capital infusion via QIP in Q1 FY26 was a transformative event for CGCL. This strategic move significantly bolstered the company’s capital adequacy, positioning it for aggressive future growth.

• Capital Adequacy Ratio (CAR) for CGCL increased to a robust 34.5% in Q1 FY26 from 31.9% in Q4 FY25. Similarly, its housing finance subsidiary, CGHFL, also saw its CAR rise to 28.9%. These strong ratios comfortably exceed regulatory requirements and provide ample room for loan book expansion.
• The company continues to maintain a diversified funding profile, drawing from Scheduled Commercial Banks, market borrowings (NCDs, CPs), Financial Institutions, and NHB Refinance. The Board’s approval to raise up to ₹10 billion via NCDs further indicates a proactive approach to funding diversification and cost optimization.
• Crucially, CGCL has fully complied with all covenants for its Non-Convertible Debentures (NCDs), demonstrating strong financial discipline. The security cover for NCDs remains healthy at 1.28 times.

This robust capital base and diversified funding structure are critical competitive advantages, especially in an environment where interest rates are being closely watched by the RBI, and FPI flows show some volatility. It allows CGCL to confidently pursue its ambitious growth targets.

Strategic Trajectory: Eyes on the Horizon

Capri Global isn’t just focused on current performance; it’s meticulously planning for the long game. The management has articulated clear, aggressive targets:

• AUM Target: Aiming for ₹500 billion by FY28 and over ₹1,000 billion by FY33. This translates to a Compound Annual Growth Rate (CAGR) of 25-30%, reinforcing its classification as a super-grower in the NBFC space.
• Profitability Targets: Expecting to deliver 16-18% Return on Average Equity (RoAE) and 4.0-4.5% Return on Average Assets (RoAA) by FY28. This signals management’s confidence that the ROAE/ROAA will recover and improve significantly as the newly infused capital is efficiently deployed and generates higher returns.

To achieve these ambitious goals, CGCL is focusing on several key strategic initiatives:

• Product Diversification: Offering customized products to underserved markets to expand revenue streams.
• Geographic Expansion: Deepening its presence in existing markets and venturing into new states by opening more branches. The company already boasts a network of 1,138 branches (up from 968 YoY), with a net addition of 27 branches in Q1 FY26.
• Technology & Analytics: Leveraging Generative AI and data science to enhance operational efficiency, employee productivity, and customer experience. This digital thrust is crucial for scaling effectively.
• Cross-selling: Maximizing revenue from its existing customer base by cross-selling various loan products and increasing insurance penetration.
• Funding Diversification: Continuously exploring new funding sources to optimize the Cost of Funds (CoF) and strengthen co-lending partnerships.

These strategic pillars, combined with strong corporate governance (evidenced by the appointment of a new CFO and joint auditors, both receiving unmodified audit opinions), position Capri Global Capital Limited as a compelling growth story in the Indian financial services sector. The company’s domestic growth theme aligns perfectly with the current macro indicators and investment insights, making it a stock to watch closely.

Key Takeaways: A Growth Story Unfolding

Capri Global Capital Limited’s Q1 FY26 results paint a picture of an NBFC in a high-growth phase, backed by prudent financial management and a clear strategic roadmap.

• Explosive AUM Growth: The 42% YoY AUM growth is a testament to strong demand for their diverse product offerings, particularly in Gold and Construction Finance loans.
• Efficiency Drives Operating Profit: Stellar cost control led to a remarkable 115% YoY surge in operating profit and a significantly improved cost-to-income ratio.
• Strategic Capital Infusion: The ₹20 billion QIP, while temporarily impacting ROAE/ROAA, has fortified the capital base, providing a strong runway for future expansion and risk absorption.
• Disciplined Asset Quality: Despite rapid growth, asset quality remains healthy with a high PCR, reflecting sound lending practices.
• Aggressive Future Outlook: Management’s ambitious AUM and profitability targets demonstrate confidence in their ability to continue on a high-growth trajectory.

In a market increasingly favouring domestic-growth themes, CGCL stands out. The temporary dip in PAT QoQ and ROAE/ROAA is understandable and strategically justified for a company poised for significant scale. Investors should focus on the continued strong AUM growth, improving operational efficiency, robust capital base, and the management’s clear vision for the future. CGCL appears to be a well-oiled machine, strategically preparing to seize the opportunities presented by India’s robust domestic demand.

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