Capri Global Capital Ltd

Company Name: Capri Global (BSE code: 531595)

Industry: Finance (NBFC)

Investment Horizon: At least 2 Years

Allocation: Allocate not more than 5% of your portfolio, at CMP of 75 and can try to add on dips

(A little highly priced at 22 P/E, investors can take the growth perspectives for investing in this company)

About the Company:

Capri Global Capital Ltd is incorporated in 1997 as Non-Banking Finance Company (NON DEPOSIT TAKING)

Its business verticals include SME loans and Construction finance viz... funding to Real estate developers and provide multiple solutions in the structured credit space such as Project Funding, Acquisition Financing, Structured Debt Financing, receivable discounting, Inventory funding and advisory

It has a subsidiary company-Capri Global Housing Private Limited will operate shortly in Housing finance

History:

Debt Advisory – Till 2012, Rs.50,000 Cr credit transactions

Qualified Institutional Placement – Raising Rs.445 Cr attracted investments from Global investment banking giants

Collaborated with Capri Capital Partners, LLC – a Chicago based investment Management Company

Industry:

We all know that our government has made a step towards Make in India initiative, with a vision that India should be a hub for manufacturing the products and providing employment Opportunities. So MSME will be the contributor to the nation’s growth and plays an important role in providing employment opportunities and livelihood. (Grant Thornton has released an article VISION 2020)

Highlights Extracted: MSME sector can contribute as much as 40% to GDP of India in the years to come (By 2020, Indian Nominal GDP is expected at 205 trillion rupees)

Even Global Analysts believe that NBFC sector can have a promising growth of 30% which is very interesting

As per Morgan Stanley report, Indian e-commerce industry to grow at a faster pace to reach 120 billion dollar revenue by 2020

Constraints:

Funding for their business would be a constraint for upcoming start-ups, MSMEs

(This is a huge potential for the company)

Some regulatory issues and compliances make a trouble for the ease of business

Pros:

• The Company has a good past record which is mentioned in History

• Promoter holding is very good at 74% for the Quarter ending June 2017

• Foreign portfolio investors has 9% holding (including Morgan Stanley Mauritius Company Limited holding 1.57% stake)

• Entering into Housing Finance Industry

• NBFC sector can have a promising growth of 30% which is very interesting

• Total Loans disbursed so far Rs.692 Cr in FY 16

• Capital Adequacy ratio is at 80% (Minimum as per RBI is 15%)

• Credit Rating by CARE – A+

• Increased number of branches from 9 to 23 in FY 16 and  Loan book grew by 16% from previous year      

• Book Value is Rs.65 (Worth Investing)

• Gross NPA is 0.88% and Net NPA is 0.75%

• Amount spent on CSR – Rs.242 Lacs in FY16

Cons:

• Return on Equity for the past three years is at 6%

• Due to the earlier company, the company is having huge reserves due to which the return on equity is low

• (The Company is formerly named as Money matter Financial Services changed its business from financial services to Lending- Allegations of Scam/Fraud)

• Formerly it accepted deposits from public but now it is into Lending business- NBFC.

• Rajesh Sharma who is a part of that scam is still working as Non-executive director but did not hold any shares

• Trading at a P/E of 22

 Financial Highlights:

• Revenues are grown at 13% for the past three years

• More than 80% of their business is Priority sector lending and expanding business to pan India

• Debt to Equity is at 0.64 (Other peers in the same industry has 4 to 5 – Remember it is NBFC)

• It has an Equity base of Rs.17 Cr

• The Company has paid dividend of Rs.1.5 per equity share for the FY 16

• The company has long term borrowings worth Rs.400 Cr (As per FY 16 Annual report) from different banks- Bank of Maharashtra, Andhra Bank, Bank of India and Vijaya Bank at a Floating rate of 11.20%. The product portfolio of the company includes SME Loans – Interest rate varies from 12% to 20% (Margin of 0% to 8% or 800 basis points) 

Narration	2012	2013	2014	2015	2016	2017
Sales	571.51	1,852.63	158.26	189.55	186.39	221.00
Expenses	511.57	1,756.68	39.44	48.00	119.26	94.32
Op Profit	59.94	95.95	118.82	141.55	67.13	126.68
OPM	10.49	5.18	75.08	74.68	36.02	57.32
Net profit	40.27	74.27	81.76	85.18	41.20	57.79
EPS	2.31	4.25	4.67	4.86	2.35	3.30
PE	7.37	5.28	5.45	6.81	11.37	22.80
Price	17.01	22.47	25.49	33.11	26.74	75.25

Management:

• Mr Quintin E. Primo III - Non-executive Chairman

• Mr Sunil Kapoor - Executive Director

• Mr Beni Prasad Rauka - Independent

• Ms. Bhagyam Ramani - Independent

• Mr. Mukesh Kacker - Independent

• Mr. Bhagwati Prasad - Independent

• Mr. T. R. Bajalia - Independent

• Mr. Rajesh Sharma - Promoter

Rating:

• Technical Rating: 75

• A breakout happened at Rs.77 which is a resistance from past 6 months (when it had made a life time high) with a tremendous volume

• It has crossed 50 day, 100 day, 200 day Exponential Moving averages    

• Fundamental Rating: 67

• Overall rating: 71

Valuations:

With the investment horizon given, considering all the inputs of estimates the valuations are at Rs.135 for one year

Valuations are made at 20X projected FY 18 EPS

(The valuations are calculated on the basis of financial inputs/estimates but investors are required to invest based on the business potential and business risks too) 

Note: Some of the information mentioned here is obtained through company website, annual reports and BSE official website

ANNUAL REPORT FY 16