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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 825.00 | ACUITE AA- | Stable | Assigned | - |
| Total Outstanding | 825.00 | - | - |
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Rating Rationale |
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Acuité has assigned its long-term rating of ‘ACUITE AA-’ (read as ACUITE Double A minus ) on the Rs. 825.00 Cr. bank facilities of Capri Global Housing Finance Limited (CGHFL). The outlook is 'Stable'.
Rationale for the rating The rating continues to derive strength from healthy capitalization levels and strong resource raising ability of the of Capri Global Group at competitive rates and adequate liquidity buffers. The company had raised fresh capital of Rs. 1,440 Cr during Q4FY23 through rights issue which has helped them augment their capital position. CGCL’s (standalone) CAR stood at 32.17 percent as on September 30, 2023. The rating considers CGCL’s comfortable capitalization levels marked by networth of Rs. 3,683.27 Cr. with a leverage at 2.39 times as on September 30, 2023 (consolidated). The rating also draws strength from the sustained growth in AUM, driven by strong disbursements and healthy asset quality indicators, its wide geographical presence, and granularity of the assets. The AUM of CGCL (consolidated) increased to Rs. 10,320.40 Cr. as on March 31, 2023 from Rs. 6,632.90 Cr. as on March 31, 2022. Further, the AUM increased to Rs. 12,358.53 Cr. as on September 30, 2023. CGCL on a consolidated basis reported gross non-performing assets (GNPA) of 1.92 percent as on September 30, 2023. The rating is however constrained by moderation in the profitability metrices as indicated by a decline in Return on Average Assets (ROAA) to 2.17 percent in FY2023 from 3.18 percent in FY2022, continued delinquencies in MSME portfolio, and a stagnant Net Profit for FY2023. Further the rating also factors high concentration of loan portfolio in the top 5 states (Maharashtra, Madhya Pradesh, Rajasthan, Haryana and Gujarat) comprising ~80 percent of the AUM, moderate seasoning of the scaled-up loan book and its incremental contribution to the profitability indicators, high operating expenses on account of addition of new branches and susceptibility to risk inherent in the MSME and construction finance segment. Going forward, the group’s ability to profitably continue the scale-up in business, particularly the gold loan segment, raising resources at competitive rates and maintenance of asset quality of its growing portfolio shall remain key monitorable. |
| About the Company |
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Capri Global Housing Finance Ltd. (CGHFL) received certificate of registration from NHB on September 28, 2015, to commence operations as a Housing Finance Company. The company is a 100% subsidiary of Capri Global Capital Ltd. (CGCL). The company started its operations from December 2016.
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| About the Group |
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Capri Global Capital Limited (CGCL) is the flagship company of Capri Group which was incorporated in 1994. It is non- deposit taking systemically important non-banking finance company(NBFC-ICC) engaged in extending loans to MSMEs loans secured against property and construction finance. CGCL has a subsidiary Capri Global Housing Finance Limited (CGHFL). CGCL’s equity is listed on BSE and NSE with the promoter and promoter group holding 69.91 percent as on September 30, 2023. CGCL is promoted by Mr. Rajesh Sharma (Managing Director) and the day-to-day operations are managed by the team led by Mr. Rajesh Sharma.
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| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
| Extent of Consolidation |
| •Full Consolidation |
| Rationale for Consolidation or Parent / Group / Govt. Support |
| Acuite has consolidated the business and financial risk profiles of Capri Global Capital Limited (Parent Company) and its subsidiary Capri Global Housing Finance Limited. This consolidation is in the view of the common promoters, shared brand name and strong financial and operation synergies.
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| Key Rating Drivers |
| Strength |
| Experienced management & healthy resources raising ability
Capri group, through its flagship company CGCL, forayed into lending business in 2010, primarily focusing towards wholesale lending and gradually shifted towards a retail book. The Group’s flagship company CGCL is listed on both BSE and NSE. Capri Group is promoted by Mr. Rajesh Sharma, with an experience of around three decades in financial services sector. CGCL has a board comprising of six members with an experience of more than three to four decades in the banking, financial services, public administration sectors. The promoter group holds ~70 percent and the remaining 30 percent is held by public, which includes mutual funds, foreign portfolio investors, individuals, bodies corporate etc. CGHFL, the housing finance arm of Capri Group is a wholly owned subsidiary of CGCL. On a consolidated basis, CGCL’s Networth stood at Rs. 3565.47 Cr. and AUM of Rs.10,320 Cr as on March 31, 2023. Further the AUM increased to Rs. 12,358.53 Cr as on September 30, 2023. The group in Q4FY2023 has raised capital through a rights issue of Rs.1,440 Cr which has led to healthy capitalization levels. The capital adequacy levels of CGCL (standalone) stood at 32.17 percent as on September 30, 2023. The Group is moderately levered and its consolidated gearing stood at 2.39 times as on September 30, 2023, which provides scope for incremental leverage to support the growth in loan book. Sustained growth in AUM through focus diversification of portfolio Over the last few years, the group has been diversifying its portfolio towards granular MSME and housing loans. The Group’s portfolio comprises of four product verticals namely, loans to MSMEs which are secured against property, housing finance, construction finance, gold loans and indirect lending to smaller NBFCs and MFIs. The company had forayed into the gold loan vertical during FY2023 as a conscious attempt to increase their focus towards diversification of the loan book. CGCL has added 562 dedicated branches in FY2023 which has helped them scale up the gold loan book to Rs 1,120 Cr (as on March 31, 2023) in a short span of time. The consolidated Asset Under Management (AUM) increased to Rs. 10,320.40 Cr. as on March 31, 2023 from Rs. 6,632.90 Cr. as on March 31, 2022. Further the AUM increased to Rs. 12,358.53 Cr. as on September 30, 2023. The growth in AUM was driven by growth across all product verticals. The Group has adopted cautious strategy towards its Construction Finance segment and intends to limit the exposure to Construction Finance to under 20 percent of AUM going forward. Under the construction finance vertical, the company majorly lends to small and medium sized developers with an average ticket size of Rs,7-10 Cr amidst a range of Rs.2 to 60 Cr exposure towards a project. Acuité believes that the management’s philosophy of focusing on the retail segment and lending towards granular assets is likely to augur well from a risk standpoint. |
| Weakness |
| Susceptibility of asset quality to inherent risks in MSME segment and real estate sector
Capri Group has a presence in the lending space since 2010. The company’s primary focus of lending is MSME & Housing Finance segment which jointly contributes ~63 percent of the overall portfolio as on September 30, 2023. The Group primarily caters to borrowers who are self- employed and are engaged in small businesses and trading activities. The cashflows of these borrowers are dependent on the overall economic activity in the region. The Gross NPAs in the MSME vertical stood at 3.5 percent as on June 30, 2023. Through its construction finance segment the company continues to be exposed to the vagaries of the real estate industry. Though these exposures are secured by way of an exclusive mortgage of immovable properties with an escrow mechanism. Additionally, a sustained slowdown in funding to the wholesale segment over the near to medium term may adversely impact the developer’s ability to complete the existing projects in a timely manner as well as launch new projects. Acuité has observed that the group’s initiated steps to take on granular exposures by focussing on housing finance. However, since MSME and Construction finance segments comprise considerable portion of the portfolio, the risk of slippage in asset quality will be a key monitorable. Moderate earning profile On a consolidated basis, Capri Group’s profitability indicators have moderated during FY2023 marked by Return on Average Assets (RoAA) at 2.17 percent as on March 31, 2023 from 3.18 percent as on March 31, 2022. The decline is attributable to increase in Operating Expenses, the Operating Expenses to Earning Assets (Opex) stands at 6.21 percent as on March 31, 2023 from 4.10 percent as on March 31, 2022. Net Interest Margins (NIM) also declined to 8.73 percent as on March 31, 2023 from 9.05 percent as on March 31, 2022. The group’s PAT levels have remained stagnant over the last two years through FY2023. The group reported PAT of Rs. 204.6 Cr in FY 2023 and sizeable income is derived from CSA (Corporate Selling Agent) business for car loan origination indicating contribution of fee based revenue in the overall revenue stream. While there has been some moderation in the profitability levels due to the heavy opex incurred on the gold loan vertical. Going forward ability of the company to build its loan portfolio while improving its profitability and sustain the growth in its fee based income will remain a monitorable. |
| ESG Factors Relevant for Rating |
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Capri Global Capital Limited (CGCL) belongs to the Non-Banking Financial Companies (NBFC) sector which complements bank lending in India. Some of the material governance issues for the sector are policies and practices with regards to business ethics, board diversity and independence, compensation structure for board and KMPs, role of the audit committee and shareholders’ rights. On the social aspect, some of the critical issues for the sector are the contributions to financial inclusion and community development, sustainable financing including environmentally friendly projects and policies around data privacy. The industry, by nature has a low exposure to environmental risks. CGCL has been focusing on extending loans to MSMEs loans secured against property and construction finance. The Capri group board comprises of six members with an experience of more than three to four decades in the banking, financial services, public administration sectors. The group companies maintains adequate disclosures with respect to the various board level committees mainly audit committee, nomination and renumeration committee along with stakeholder management committee. The group companies also maintains adequate level of transparency with regards to business ethics issues like related party transactions, investors grievances, litigations, and regulatory penalties for the group, if relevant. In terms of its social impact, CGCL is actively engaged in community development programmes through its CSR activities.
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| Rating Sensitivity |
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| Liquidity Position |
| Adequate |
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CGHFL (standalone) has adequately matched asset liability profile with no negative cumulative mismatches in the maturity buckets based on ALM as on September 30, 2023. The cash and bank balance stood at Rs 1,012.04 Cr as on December 31, 2023.
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| Outlook: Stable |
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Acuité believes that Capri Group’s credit profile will be supported by its experienced management, support from CGCL and healthy capitalisation level. The outlook may be revised to ‘Positive’ in case the company is able to scale up its loan book significantly while maintaining its asset quality and profitability metrics. Conversely, the outlook may be revised to ‘Negative’ in case of significant deterioration in asset quality/ profitability metrics or significant concentration of portfolio towards real estate sector.
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| Other Factors affecting Rating |
| None |
| Key Financials - Standalone / Originator | ||||||||||||||||||||||||||||||||||||||||
*Total income equals to Net Interest Income plus other income
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| Key Financials (Consolidated) | ||||||||||||||||||||||||||||||||||||||||
*Total income equals to Net Interest Income plus other income
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| Status of non-cooperation with previous CRA (if applicable) |
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Brickworks vide its press release dated Aug 25, 2023, had reaffirmed CGCL (parent entity) at AA-/Stable; Issuer Not Cooperating.
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| Any Other Information |
| None |
| Applicable Criteria |
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| Note on Complexity Levels of the Rated Instrument |
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In order to inform the investors about complexity of instruments, Acuité has categorized such instruments in three levels: Simple, Complex and Highly Complex. Acuite’s categorisation of the instruments across the three categories is based on factors like variability of the returns to the investors, uncertainty in cash flow patterns, number of counterparties and general understanding of the instrument by the market. It has to be understood that complexity is different from credit risk and even an instrument categorized as 'Simple' can carry high levels of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in.
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| *Annexure 2 - List of Entities (applicable for Consolidation or Parent / Group / Govt. Support) |
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As on March 31, 2023, CGCL has one subsidiary namely Capri Global Housing Finance Limited (“CGHFL”).
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Contacts |
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