Capri Global Capital Ltd (CGCL) Q1 FY27 Earnings Call: Revises FY28 AUM Target to Rs. 65,000 Cr, Spreads Expand to 7.8%

Capri Global Capital Ltd held its Q1 FY27 earnings call on July 27, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Record Profit & AUM Growth Across Segments

• Consolidated PAT of Rs.353 crore — up 102% YoY in Q1 FY 2026-2027, with AUM reaching Rs.40,112 crore (+62% YoY, +10% QoQ) driven by broad-based portfolio growth.
• Net interest income (NII) rose 79% YoY to Rs.736 crore — blended yield improved to 17% and spreads expanded to 7.8%; non-interest income contributed Rs.217 crore (+28% YoY), representing 23% of total income.
• Pre-provision operating profit (PPOP) surged 17.1% YoY to Rs.532 crore — cost-to-income ratio improved sharply to 44.2% in Q1 FY 2026-2027 (vs 49.4% in Q4 FY26), reflecting operating leverage.
• Return on average equity (ROAE) reached 19.1% — up from 13% a year ago; return on average assets (ROAA) stood at 4.1% (vs 3.2% in Q1 FY 2025-2026).
• Insurance distribution (CapriCare) generated net fee income of Rs.42 crore — car loan originations reached Rs.3,282 crore (+43% YoY), though volume moderated in Q1 FY 2026-2027 due to a deliberate profitability-first strategy.

Gold Loan AUM Doubles; Branch Network Expanding Rapidly

• Gold loan AUM grew 111% YoY to Rs.19,179 crore — representing 47–48% of total AUM; management targets a 55% mix in the medium term (FY 2026-2027), with gold collateral of 20.2 tonnes (+6% QoQ).
• Gold loan branch addition target revised upward to 400 for FY 2026-2027 — 150 branches planned in Q2 FY 2026-2027 and 250 in Q3 FY 2026-2027, completion targeted by December 2026 (Q3 FY 2026-2027); total branch network at 1,433 locations.
• Branch productivity improved to Rs.19 crore per branch — up from Rs.17 crore last quarter, driven by higher throughput from existing branches and ticket-size optimisation.
• Gold loan yields improved to 18.6% in Q1 FY 2026-2027 — supported by a shift to smaller ticket sizes and a revised incentive plan; management expects a further 50–75 bps yield improvement in subsequent quarters of FY 2026-2027.
• Steady-state gold loan book growth guided at 25% for FY 2026-2027 — excluding gold price effects, with additional upside from new branch additions; weaker monsoons could drive marginal farmers to gold loans for cash gaps, per management.

FY28 AUM Target Revised Upward to Rs.65,000 Crore

• FY28 AUM target raised to Rs.65,000 crore — implying a 30%+ CAGR from the current Rs.40,112 crore; management also guided FY27 AUM at Rs.50,000 crore (revised from Rs.47,000 crore).
• Quarterly AUM additions expected in the range of Rs.3,000–Rs.3,500 crore — with the last two quarters of each fiscal year typically higher than the first two; product-wise disbursement breakup was not provided on the call.
• Co-lending & direct assignment (DA) AUM stood at Rs.8,126 crore — 20% of total AUM, up 74% YoY but only 4% QoQ due to new CLM1 guidelines; 6 of 11 partner banks have already migrated to CLM1.
• Car loan originations reached Rs.3,282 crore (+43% YoY) — but origination volume and values moderated in Q1 FY 2026-2027 as management prioritised profitability over volume growth, stating they will not pursue cash-burn growth unlike some competitors.
• Planned launch of a used car loan product — pilot followed by full-fledged rollout, expected to support margins over the next couple of years.

Spreads at 7.8%; Medium-Term ROA/ROE Targets Reiterated

• Spreads expanded to approximately 7.8% in Q1 FY 2026-2027 — above historical levels; management expects spreads to remain in the 7.8%–8% range, with 8% achievable when the gold loan proportion crosses 52–53%.
• Medium-term ROA guided at 4.2%–4.7% and ROE at 19%–21% — ROA already crossed 4% in Q1 FY 2026-2027; sustainable achievement of these targets is expected by FY28 (FY 2027-2028), despite ongoing branch expansion of 400–500 branches per year.
• Cost-to-income ratio guided at 44–45% over the next 12–18 months — improvement from operating leverage as higher volumes from existing branches offset branch expansion costs.
• Cost of funds declined by 10 bps in Q1 FY 2026-2027 — management expects cost to remain stable for the remainder of FY 2026-2027; diversification efforts (public bonds, commercial paper, institutional refinancing, and a planned GMTN program) will reduce the share of bank borrowings.
• Car loan margins expected to improve over the next couple of years — with the planned launch of a used car loan product, though near-term profitability remains secondary to volume growth in that segment.

Asset Quality Stable; Gold Price Decline Drives Stage 2 Rise

• Overall GNPA at 1.1% and net NPA at 0.6% — well below the company's internal benchmark of 2% GNPA and 1% net NPA; gold loan GNPA stood at just 0.3%.
• Stage 2 assets increased by Rs.385 crore sequentially — driven primarily by a Rs.373 crore rise in gold loans due to a 4% QoQ decline in gold prices, causing more cases to be classified as Stage 2; coverage ratio fell from 11.8% to 9.4%.
• Construction finance GNPA rose from 0.3% to 0.7% QoQ — due to a single account slipping, for which management took a 70% provision; management noted a track record of recovering such accounts within 6–9 months via project takeovers, backed by strong collateral.
• Average gold loan LTV at 71% on a disbursement basis — providing a 29% margin sufficient to protect against a decline in gold prices; an automated margin call and auction process (LTV breach above 85%) mitigates asset quality risk.
• Rs.125 crore under DCCO extension classified as standard — outside the 0.7% construction finance GNPA; DCCO cases are not considered NPAs under the new norms.
• Management expects asset quality to remain stable for the remaining quarters of FY 2026-2027 — citing a 100% collateralized secured portfolio, a collection team of 525+ members, and investment in technology/data science.

AI Deployment, MSME Strategy, and Leadership Stability

• AI platform analysed 6.7 lakh customer calls — with 2.64 lakh geo-tagged field visits and nearly 90% of inbound payments digital; management has a collaboration with OpenAI for enterprise-grade generative AI.
• MSME portfolio growth deliberately slowed — targeting 50–60% annual overall growth for FY 2026-2027, with capital allocation directed primarily to gold loan branches to achieve profitability first; MSME growth kept "measured".
• Business heads driving revenue remain stable — with tenures of 7–10 years across gold loan, construction finance, and housing finance; recent leadership transitions were internal transfers to the housing finance subsidiary to comply with RBI regulations after AUM crossed Rs.5,000 crore.
• Management characterised the 10–20% leadership churn as normal and industry-typical — clarified there is no vacant CEO position and no plan to hire a CEO.
• Branch network at 1,433 locations — plans to add 400+ branches in FY 2026-2027, with 150+ gold loan branches expected by end of Q2 FY 2026-2027.