Recommendations From Finance Sectors

This section gives a recommendation of a stock having stockmargin padding price below Rs 100 with sound fundamentals and expected to give handsome returns over a one-year time horizon

Capri Global Capital 
NURTURING MSMES FOR FAST-PACED GROWTH 

HERE IS WHY
Rural growth driving demand
Robust financials
igher consumption by nuclear families

Capri Global Capital Limited (CGCL) is a RBI registered non-deposit taking, non-banking finance company (NBFC). It focuses on the financing of micro, small and medium enterprises (MSME), construction finance and housing finance segments. Product portfolio of MSME finance include business loan against residential/ commercial/ industrial properties and financing for purchase of commercial/ industrial properties. 

In the MSME finance segment in FY18, CGCL increased its presence to 66 locations from 38 in FY17, adding new branches in tier 2/3 cities. Its MSME book size increased 28.46 per cent to Rs 1,55,923.35 lakh on a YoY basis. In the coming years, CGCL plans to reduce reliance on intermediaries and focus on direct sourcing via its branch network. 

Its construction finance segment book size stood at Rs 1,05,404 lakh at the end of the year, registering an increase of 74.86 per cent from a year-ago period. The company plans to reach further into high potential states for affordable housing like Telangana and Rajasthan. 

Further, FY18 was the first full year of operation of the company’s housing finance subsidiary. The loan book at the end of the year was Rs 24,633 lakh with an average ticket size of Rs 11 lakh and average tenure of over 207 months. 

The housing finance business is expected to blossom on the back of incremental business from smaller towns. CGCL plans to consolidate its presence in North and West India and drive higher profitability from its existing operations in this segment. On the financial front, the company posted a 66.76 per cent increase in its net sales to Rs 101.84 crore in the fourth quarter of FY18 as against Rs 61.07 crore in the same quarter of the previous fiscal. 

The PBDT of the company increased by 69.33 per cent to Rs 38.59 crore in the fourth quarter of FY18 as against Rs 22.79 crore in the same quarter of the previous fiscal. The net profit of the company also increased by over 114 per cent to Rs 25.5 crore in the fourth quarter of FY18 as compared to Rs 11.91 crore in the same quarter of the previous fiscal. 

On the annual front, the net sales of the company increased by 57.76 per cent to Rs 336.45 crore in FY18 as against Rs 213.27 crore in FY17. The PBDT of the company increased by 39.46 per cent to Rs 138.61 crore in FY18 as against Rs 99.39 crore in the previous fiscal. The net profit of the company increased by over 62 per cent to Rs 94 crore in FY18 as compared to Rs 57.79 crore in the previous year. 

On the valuation front, the company is trading at a PE ratio of 13.16x. The company’s return on equity (RoE) and return on capital employed (RoCE) stood at 8.61 per cent and 62.46 per cent, respectively. The company has a debt-to-equity ratio of 1.25x. 

The stock is trading at 1.09 times its book value and is expected to give a good quarter. Further, considering the drive in consumption due to higher per capita income and growth in rural demand, we recommend our readerinvestors to BUY the stock.