Gold loans, fee income to power Capri Global; JM Financial starts coverage

JM Financial said the non-bank lender's diversified retail-focused franchise, strong asset quality and expanding non-interest income engine position it well for sustained growth.

JM Financial is upbeat on Capri Global stock as the domestic brokerage has initiated coverage on the company with a ‘Buy’ rating and a target price of ₹245, valuing the stock at 2.3x FY28E P/B. 

 

The brokerage said the non-bank lender’s diversified retail-focused franchise, strong asset quality and expanding non-interest income engine position it well for sustained growth. Capri Global, founded in 2011, has built an entirely 100 per cent secured lending book, with nearly 80 per cent of its assets in retail segments.

 

The company began with construction finance (CF) and later entered secured MSME lending in 2013. In 2017, it added housing finance through a subsidiary. Post-pandemic, the lender capitalised on the surge in gold prices by foraying into gold loans (GL) in 2022. 

 

 

Most recently, in 2025, it launched micro-LAP, a segment gaining traction in the broader credit market. Its current portfolio mix is MSME (21 per cent), GL (38 per cent), housing finance (22 per cent) and CF (18 per cent). Capri Global also operates a car loan origination business, a sourcing-only model that adds stable fee income. Nearly 20 per cent of AUM is now in co-lending and direct assignment structures, which have boosted income meaningfully over the last four years. The company also received its insurance distribution licence in 2024, deepening its non-lending revenue pool.

 

Analysts at JM Financial expect the lender to deliver asset under management (AUM) compound annual growth rate (CAGR) of ~35 per cent between FY25 and FY27, supported by operating leverage and steady credit costs of about 0.5 per cent post FY26. This, it said, should drive PAT CAGR of nearly 62 per cent over the same period, translating into average RoA/RoE of 3.6 per cent/15.6 per cent over FY26–FY27.  ALSO READ | Auto sector rides on GST 2.0, festive demand; Nirmal Bang names top picks

Gold loans, MSME tailwinds to drive AUM momentum

 

According to the brokerage, Capri Global’s rapid expansion in its gold loan book over the past three years has been a key driver of incremental growth. While the lender continues to operate across multiple secured segments, housing finance, construction finance and MSME, analysts at JM Financial believe the gold loan segment remains especially attractive due to its higher yield profile. To balance this, Capri the company plans to scale up MSME prime loans, which carry relatively lower yields and will help offset any margin pressure from the expanding high-yield micro-LAP portfolio.

 

The brokerage expects the combined strength of gold loans and MSME credit demand to keep growth elevated, sustaining the ~35 per cent AUM CAGR outlook through FY27.

Non-interest income adds stability; asset quality remains strong

 

Non-interest income has become an increasingly important contributor to Capri Global’s profitability. Co-lending, which the company entered in 2021, now contributes ~40 per cent of other income through stable spreads. The dedicated car loan origination vertical continues to deliver consistent fee income, while the insurance distribution licence secured in 2024 has added incremental revenue for five consecutive quarters. The company’s foray into bond syndication in 2QFY26 is expected to further strengthen its fee income profile.

 

Asset quality remains robust, with GS3/NS3 at 1.3 per cent/0.7 per cent in Q2FY26, analysts highlighted. Although CGCL saw a temporary increase in GNPA in Q1FY26, primarily in MSME and CF, collections improved swiftly as a result of tighter monitoring, lowering stress levels to better-than-previous trends. Given its fully secured loan book, JM Financial does not foresee any material deterioration in asset quality.  ALSO READ | Emkay predicts strong upside in Ipca Labs shares on India, export growth

Valuation and risks

 

At current valuations, Capri Global trades at around 1.8x FY28E P/BV, which the brokerage believes leaves meaningful upside. Using a residual income model, JM Financial arrives at a target price of ₹245, implying healthy potential returns. 

 

Key downside risks, analysts believe, include a sharp correction in gold prices, a broad economic slowdown, or rising stress within the MSME segment.    Disclaimer: The stock target and outlook has been suggested by JM Financial. Views expressed are their own.