Equity Infusion And Branch Rollout Will Transform India's Lending Landscape

Key Takeaways

• Aggressive expansion into new lending verticals and underpenetrated regions, supported by digital innovation, strengthens loan growth and earnings stability.
  
• Growing co-lending partnerships and supportive government policy improve funding access, reduce costs, and help sustain long-term profitability.
  
• High exposure to gold and MSME loans, rapid expansion, and slow digital adoption heighten Capri Global's risks to asset quality, margins, and competitive pressure.

Catalysts

A non-banking financial company, provides financial services in India.

• The recent ₹2,000 crore equity capital infusion has substantially strengthened the balance sheet, enabling Capri to aggressively scale its core lending verticals (MSME, affordable housing, gold loans, construction finance) and expand branch infrastructure, directly supporting sustained 30% annual AUM growth and higher future revenue.
  
• Expansion into gold loans and affordable housing, along with a large new-branch rollout (200–250 branches/year), increases addressable market in underpenetrated regions, leveraging ongoing urbanization and formalization of the Indian economy to drive granular, diversified loan growth-positively impacting future topline and earnings stability.
  
• Investments in generative AI, data science, and other digital technologies are advancing operational efficiency, improving underwriting, and enabling scalable customer acquisition-leading to structurally lower cost-to-income ratios and potential long-term margin expansion.
  
• Rapidly growing co-lending partnerships with major banks (e.g., SBI, Union Bank) are increasing the share of low-cost funding, which, together with an expected interest rate softening and a potential credit rating upgrade, will lower borrowing costs and directly boost net interest margins and profitability.
  
• Government focus on supporting financial inclusion (PMAY, targeted subsidies, pro-SME policy) is generating long-term, stable demand for secured credit among underserved populations, providing structural tailwinds that support resilient loan book expansion, low credit costs, and persistent earnings growth.

Capri Global Capital Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Capri Global Capital's revenue will grow by 31.9% annually over the next 3 years.
• Analysts assume that profit margins will increase from 30.2% today to 34.9% in 3 years time.
• Analysts expect earnings to reach ₹15.3 billion (and earnings per share of ₹14.32) by about August 2028, up from ₹5.8 billion today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 23.5x on those 2028 earnings, down from 31.3x today. This future PE is lower than the current PE for the IN Consumer Finance industry at 27.9x.
• Analysts expect the number of shares outstanding to grow by 3.66% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 16.44%, as per the Simply Wall St company report.

Capri Global Capital Future Earnings Per Share Growth

Risks

• Concentration risk in gold loans and MSME segments may increase company vulnerability to sectoral or geographic downturns, particularly as gold is projected to reach 37–40% of the portfolio and MSME has already shown rising stress in regions like Madhya Pradesh; this could negatively impact credit costs and overall asset quality, with rising GNPA and credit cost noted in recent quarters.
  
• Rapid branch expansion (200–250 branches annually, including significant new geography roll-out), while supporting growth ambitions, could elevate operational risks, execution challenges, and increase OpEx and cost-to-income ratios, potentially pressuring net margins if productivity or asset quality does not keep pace.
  
• Reliance on physical distribution and gradual digital adoption, especially in key retail and gold loan businesses, may leave Capri Global exposed to competitive threats from faster-moving fintechs and digital NBFCs, risking future revenue growth and customer retention.
  
• Elevated credit cost guidance (up to 70bps) and recurring slippages in collateralized segments such as MSME, Micro LAP, and construction finance (with delayed or potentially lengthy recovery timelines), suggest sustained vulnerability to asset quality shocks, which may depress earnings quality and net margins.
  
• Increasing competition in secured retail lending (gold loans, affordable housing, MSME) and co-lending-combined with management's stated intention to pass on borrowing cost reductions to customers-could compress yields and spreads in the medium term, limiting topline growth and profit expansion despite rising AUM.

Valuation

• The analysts have a consensus price target of ₹212.5 for Capri Global Capital based on their expectations of its future earnings growth, profit margins and other risk factors.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be ₹43.8 billion, earnings will come to ₹15.3 billion, and it would be trading on a PE ratio of 23.5x, assuming you use a discount rate of 16.4%.
  
• Given the current share price of ₹187.85, the analyst price target of ₹212.5 is 11.6% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.