| Capri Global Capital Limited | ||
| Rated amount enhanced for Commercial Paper | ||
| Rating Action | ||
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| Note: None of the Directors on Crisil Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||
| 1 crore = 10 million | ||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale Crisil Ratings has reaffirmed its ‘Crisil A1+’ rating on the Commercial Paper of Capri Global Capital Limited (CGCL).
The rating remains driven by the company’s comfortable capitalisation, segmental diversity in its assets under management (AUM) and controlled reported asset quality metrics, albeit with limited seasoning. These strengths are partially offset by moderate earnings and concentrated resource profile.
Promoted by Mr. Rajesh Sharma, CGCL commenced lending operations in fiscal 2011 and presently, offers loans to micro, small & medium enterprises (MSMEs), housing loans, construction finance, indirect lending (loans to other non-banking financial companies [NBFCs]) and gold loans, along with distribution services for third-party products. Recently, the company has also started Micro-LAP and Solar Finance under MSME.
Through fiscal 2024, the AUM grew at a three-year compound annual growth rate of 48%, reaching Rs 15,653 crore as on March 31, 2024 from Rs 4,848 crore as on March 31, 2021. Over the subsequent nine-month period, the AUM further grew to Rs 20,674 crore as on December 31, 2024, driven by high traction in gold loan portfolio, which formed 34% of the AUM as of that date, up from 11% as of March 31, 2023. The other growth factor has been the off-book portfolio (partner book) which increased on account of co-lending arrangements entered into by the company since fiscal 2022. Resultantly, the share of off-book portfolio in overall AUM has increased to 17.8% as on December 31, 2024, from 11.7% on March 31, 2024 and even lower at 1.7% as on March 31, 2022.
Alongside the scale up in business, the reported asset quality metrics have remained under control – reflected in gross non-performing assets (GNPAs) of 1.7% (Rs 284 crore) as on December 31, 2024, as against 1.9% (Rs 265 crore) as on March 31, 2024. However, given the rapid scale-up in the loan book in recent years, the portfolio seasoning remained limited, especially in the newly forayed gold loan segment wherein the company entered only in 2022. The company has written off Rs 36 crore in fiscal 2024 and Rs 50 crore (~0.4% of opening own book) during the first nine months of fiscal 2025. As the portfolio gains more vintage, the company’s ability to sustain asset quality at sound levels, will remain monitorable.
Furthermore, the resource profile of CGCL remains concentrated in relation to the company’s scale of operations with high reliance on bank borrowing (~87% of total borrowing as on December 31, 2024).
The company’s financial risk profile is supported by its comfortable capitalization, marked by a consolidated networth of Rs 4,127 crore, an adjusted gearing of 3.4 times and a standalone Tier I capital adequacy ratio of 23% as on December 31, 2024. The company raised Rs 1,440 crore in fiscal 2023 via rights issue which has augmented its networth, in addition to internal accretions through profits. This gradual buildup of capital has supported the company’s business growth over the last few years.
CGCL’s earnings profile, however, has remained moderate. Owing to infrastructural expansion for scaling the gold loan business, the company’s operating cost to average managed assets ratio increased to 7.0% for fiscal 2024 from 6.1% for fiscal 2023. However, for nine months ending fiscal 2025, the metric has restored to 6.1% owing to scale-led operating efficiency. The return on average managed assets (RoMA) remained stable at 2.0% (annualized) for nine months ended December 31, 2024 as against 1.9% for fiscal 2024. Going forward, scale-led operating efficiencies will be key to the company’s profitability. |
Analytical Approach For arriving at the rating, Crisil Ratings has assessed the consolidated business and financial risk profiles of CGCL and its wholly owned subsidiaries. These entities have significant operational, financial, and managerial integration and operate under a common brand name.
Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers & Detailed Description Strengths: Comfortable capitalization: CGCL’s capitalisation is comfortable in relation to its nature and scale of operations. Consolidated networth increased to Rs 4,127 crore as on December 31, 2024 (from Rs 3,565 crore as on March 31, 2023), while overall CAR was comfortably above the regulatory requirement at 22.9% and adjusted gearing at 3.4 times on the same date. On a steady-state basis, the company intends to operate at a consolidated gearing level of around 4-5 times.
Since inception, the company has cumulatively raised ~Rs 1,885 crore of which Rs 1,440 crore was raised in fiscal 2023 via rights issue. The promoter group holds 69.9% stake in CGCL, followed by Life Insurance Corporation of India (9.2%) and SBI Life Insurance Company Ltd (3.7%).
CGCL provides housing loans through its wholly owned subsidiary -- Capri Global Housing Finance Ltd (CGHFL) -- in which CGCL has invested Rs 524 crore thus far. Of this, Rs 200 crore was infused in fiscal 2024. The other subsidiary -- Capri Loans Car Platform Pvt Ltd -- was established in October 2023 for carrying out the car loan distribution business and has low capital requirement given the nature of the business.
In the normal course of business, the company’s consolidated capitalisation is expected to remain comfortable with adequate cushion being maintained in CAR over the stipulation and adjusted gearing remaining controlled.
Improving segmental diversity in portfolio: The company started its lending operations in 2011 with construction finance and has, since then, diversified its product offerings by venturing into, and scaling across segments such as: secured loan against property (which the company terms as MSME), housing loan, indirect lending and most recently- gold loans. The company also provides distribution services for multiple third-party products.
CGCL’s AUM grew 43% (annualized) in the first nine months of fiscal 2025 to reach Rs 20,674 crore as on December 31, 2024, from Rs 15,653 crore as on March 31, 2024 (Rs 10,320 crore a year ago). Growth in recent years was primarily driven by scale up in gold loan book and co-lending partnerships entered into with large banks.
The company started co-lending arrangements with the banks in the MSME segment in 2022 and eventually expanded into housing and gold loan segments as well. Over time, the company has established co-lending tie-ups with large banks such as State Bank of India, Union Bank of India, Central Bank of India, Indian Overseas Bank, Bank of Baroda, UCO Bank, YES Bank, Bank of Maharashtra, Punjab and Sind Bank and Bank of India.
In terms of portfolio mix, the share of wholesale portfolio in the overall AUM was higher until a few years ago. However, upon witnessing a few asset quality issues in the wholesale lending segment, the company reduced the ticket size in construction finance and MSME portfolio, and has been making efforts to diversify across asset classes with primary focus on retail lending. As on December 31, 2024, AUM (including co-lending portfolio) consisted of MSME loans (24%), housing loans (22%), gold loans (34%), construction finance (18%) and indirect lending (1%). Over the medium term, CGCL plans to maintain a retail focused portfolio with the share of wholesale book being capped at 25% of the overall AUM.
CGCL aims to replicate the diversification strategy in its distribution business as well. The company provides distribution services for third-party car loans and has intermediated Rs 7,770 crore worth of car loans in the first nine months of fiscal 2025 (Rs 9,742 crore in fiscal 2024). The company has also received the license for distribution of third-party insurance products, which is expected to improve CGCL’s overall business risk profile through cross-selling opportunities, also imparting diversity to the earnings profile.
Controlled reported asset quality metrics, ability to sustain the same with portfolio seasoning remains key: CGCL’s reported GNPAs have remained sub 3.5% over the past five fiscals and, improved to 1.7% (Rs 284 crore) as on December 31, 2024, from 1.9% (Rs 265 crore) as on March 31, 2024. Furthermore, the company has written off Rs 50 crore (~0.4% of the AUM) in the first nine months of fiscal 2025 and Rs 36 crore in full fiscal 2024. On account of provision coverage ratio of 39%, net NPA stood at 1.0% as on December 31, 2024, as against 1.1% as on March 31, 2024.
With the objective of strengthening its risk management systems and practices, the company has made significant investments in technology, operational systems and underwriting processes. Additionally, the company’s portfolio is primarily secured and diversified (with no product contributing more than 40% of the portfolio). The success of upgradations made to internal risk monitoring systems alongside portfolio growth will remain critical for sustaining asset quality metrics.
However, given the fast paced growth of AUM in the past few years, the track record of profitably scaling some of the new portfolios such as gold loans, remains limited. In the context of limited vintage in AUM, the company’s ability to ensure strong collection and recovery mechanism, while keeping GNPA levels within controlled limits, shall remain a key monitorable.
Weaknesses: Moderate earnings profile: After maintaining RoMA above 3% consistently till fiscal 2022, the company’s profitability moderated in fiscal 2023 and 2024 owing to increase in operating expenses. This was on account of infrastructural expansion for the gold loan business, expenses incurred in strengthening overall technology, hiring at senior management level and, marketing overheads. For nine months ending fiscal 2025, the operating expenses reduced on account of scale based operating efficiency which was offset by higher cost of funds and consequently, the company reported profit after tax (PAT) of Rs 301 crore for the first nine months of fiscal 2025 (annualised RoMA of 2.0%) against Rs 197 crore (annualised RoMA of 1.9%) for the corresponding period of previous fiscal.
The company started its gold loan business in August 2022 with 108 dedicated gold branches and within a span of 28 months, expanded to 776 branches across 9 states and union territories as of December 2024. Additionally, the company has invested heavily in technology in the last three years to build in-house technology team to strengthen their technology infrastructure. This led to an increase in operating expenses (as a % of average managed assets) from 4.2% in fiscal 2022 to 6.1% in fiscal 2023 and 7.0% in fiscal 2024. While this metric has corrected to 6.1% over 9M 2025, it continues to constrain the overall profitability.
Ability to restore overall profitability with economies of scale, by keeping operating and credit costs under control, will remain a key monitorable.
Concentrated resource profile marked by high reliance on bank funding: CGCL had total borrowing of Rs 14,092 crore as on December 31, 2024, which was dominated by bank loans to the tune of 87%, followed by loans from financial institutions (FIs) forming 10% and remaining 3% comprising non-convertible debentures (NCDs). With respect to lender mix, the company has access to multiple banks with active lending relationships with more than 20 lenders as on December 31, 2024. The company’s average cost of borrowings was 9.9% for the first nine months of fiscal 2025 (consolidated basis), compared with 9.3% for full fiscal 2024 and 8.6% for full fiscal 2023.
With the launch of short-term lending product (gold business in fiscal 2022), the company is planning to incrementally raise some borrowing via commercial paper/ working capital demand loan (WCDL) to better match their overall asset liability maturity (ALM) profile, though the focus will remain on bank borrowing going forward.
Stability in senior management: CGCL has been focusing on strengthening its board as well as its leadership team. However, due to a relatively higher churn in its leadership team in the recent past, coupled with fresh on-boarding of senior executives for multiple new roles created within the organisation, the average association vintage of the leadership with CGCL – remains limited. Between fiscals 2020 and 2022, there were five exits from three senior management positions of the company. While this rate of attrition has reduced over the past fiscal, the company has added 9 new positions to its organisation structure in the last 4 fiscals and, hired executives for the same. Considering the erstwhile churn in, and sizable fresh additions to, the leadership, the company’s reliance on a limited number of senior management executives, including the managing director and promoter, remains high which exposes the enterprise to high key person risk. |
Liquidity: Strong Liquidity position is supported by sufficient cash and cash equivalents of Rs 1600 crore (including Rs 304 crore of cash and cash equivalents for CGFHL and unutilised bank lines Rs 196 crore as on March 31, 2025). Against this, the upcoming scheduled debt repayment were Rs 1,448 crore (incl. Rs 242 crore for CGHFL) over the following three months till June 30, 2025. With respect to the ALM profile as on December 31, 2024, there were positive cumulative mismatches across all buckets over the following 1-year period. |
Rating sensitivity factors Downward factors
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About the Company CGCL is an NBFC-ND-SI registered with the Reserve Bank of India. CGCL was originally incorporated in November 1994 as Daiwa Securities Ltd. In May 1999, the name of the company was changed to Dover Securities Ltd. In April 2007, Mr Rajesh Sharma (Promoter) and Money Matters (India) Pvt Ltd acquired majority stake in the company and the name of the company was again changed to Money Matters Financial Services Ltd in October 2008. Subsequently, the name of the company was changed to CGCL in July 2013. The company commenced lending operations in 2011. CGCL together with its subsidiaries offers diversified financial services such as lending across multiple products - MSME loans, housing loans, construction finance, indirect lending (loans to other NBFCs) and gold loans. It also distributes third-party new car loans and has recently received the corporate agency license for distribution of third-party insurance products as well. |
Key Financial Indicators: (Consolidated)
^On an annualised basis |
Any other information: Not Applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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Annexure - List of Entities Consolidated
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| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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Criteria Details
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