Whalesbook
Strong Profit Growth Driven by AUM Expansion
Capri Global Capital Limited finished fiscal year 2026 with profit after tax nearly doubling, driven by aggressive growth in its lending business. The company's total Assets Under Management (AUM) grew significantly, showing strong demand for its credit offerings, particularly in gold loans which now account for almost half of its portfolio. This strong performance indicates efficient operations and successful scaling, but it's important to consider the wider changes occurring in the NBFC sector.
Financial Performance Metrics
For FY26, CGCL posted a profit after tax of ₹948.6 crore, a substantial 98% increase from ₹478.5 crore the previous year. This accelerated growth was supported by a 60% year-on-year rise in consolidated AUM to ₹36,623.3 crore by March 31, 2026. The company's operational efficiency improved, with its Cost-Income ratio dropping to 49.4% from 59.9% in FY25. Return on Average Equity (ROAE) rose to 16.5%, and Return on Average Assets (ROAA) improved to 3.5%. Asset quality also strengthened, as the Net Non-Performing Asset (NPA) ratio fell to 0.5%, and Gross NPA stood at 0.9%.
Gold Loans Lead the Way
The gold loan segment was a key driver of growth, with AUM more than doubling to ₹16,964.6 crore. This segment now represents 46.3% of CGCL's total loan portfolio, highlighting its strategic importance.
Valuation Compared to Peers
Capri Global Capital's price-to-earnings (P/E) ratio stands around 19x-24x, placing it in a valuation range that is comparable yet distinct from its competitors. Muthoot Finance, the largest gold finance NBFC, trades at a lower P/E of approximately 16x, despite having a market capitalization of around ₹1.37 lakh crore. Manappuram Finance, another major gold loan provider, shows a wider P/E range, from 16x to over 64x in recent reports, with a market cap near ₹25,000 crore. In comparison, Cholamandalam Investment and Finance, a diversified NBFC, trades at a higher P/E of about 25x-27x and has a market cap exceeding ₹1.33 lakh crore.
Analyst Views and Sector Challenges
Analysts generally maintain a 'BUY' consensus for CGCL, with an average target price between ₹214-₹224, suggesting a potential upside of 16-36%. However, the broader NBFC sector faces challenges. ICRA forecasts slower profit growth in FY2026 due to anticipated higher credit costs, particularly in unsecured lending segments, and a potential slight weakening of bad loan ratios. Despite these sector-wide risks, CGCL's focus on secured lending, especially gold loans, and its aggressive AUM growth targets remain key strategic drivers. The NBFC sector overall is projected to grow 15-17% in FY26, with retail and gold loan segments expected to lead this expansion.
Underlying Risks and Regulatory Scrutiny
Despite CGCL's strong profit growth, a deeper look reveals underlying risks. Its valuation appears stretched when compared to some larger peers that trade at lower multiples. The company's significant reliance on gold loans, while currently a strong performer, exposes it to potential volatility from gold price fluctuations and shifts in demand. Furthermore, CGCL has faced regulatory and legal challenges. In September 2023, SEBI fined 25 individuals ₹1.3 crore for share price manipulation in CGCL shares between 2019 and 2020. In 2018, a former senior employee was arrested for alleged fraud related to loan sanctioning. More recently, a Group Head of Collections was terminated in January 2025 following an internal investigation into alleged illegal activities. A legal case concerning loan default under the Negotiable Instruments Act was active in May 2025. Tijori Finance also noted that CGCL is "less financially stable compared to its competitors." The planned increase in borrowing limits to ₹35,000 crore, awaiting shareholder approval, will support expansion. However, this also increases financial leverage and potential risk, especially as sector-wide asset quality pressures are expected to persist.
Future Growth Ambitions
Capri Global Capital has set an ambitious target to reach ₹55,000 crore in AUM by FY28, indicating a compound annual growth rate of 25–30%. This outlook depends on sustaining momentum in its core lending areas and effectively managing its expanded balance sheet, all while navigating the NBFC sector's potential for deteriorating asset quality and rising credit costs.