Capital First Ltd. share price target

Capital First (CAPF) is a leading NBFC specialized in providing debt financing to Self-employed Entrepreneurs, MSMEs and consumers in India. CAPF has financed over 4 million customers in more than 225 locations across...

Capital First (CAPF) is a leading NBFC specialized in providing debt financing to Self-employed Entrepreneurs, MSMEs and consumers in India. CAPF has financed over 4 million customers in more than 225 locations across...

Background: Capital First Ltd (erstwhile Future Capital Holdings Ltd) is a non-deposit taking NBFC with large focus on retail lending. Capital First provides loans to retail customers (in the form of secured and unsecured loans to small and medium enterprises (MSME), consumer durables loans, two-wheelers loans and housing loans) and corporate customers (loans to real estate developers) on a selective basis. AUM (Asset under Management) stood at INR 296bn as of 1QFY19 with a mix of Retail- 91%...

Background: Capital First Ltd (erstwhile Future Capital Holdings Ltd) is a non-deposit taking NBFC with large focus on retail lending. Capital First provides loans to retail customers (in the form of secured and unsecured loans to small and medium enterprises (MSME), consumer durables loans, two-wheelers loans and housing loans) and corporate customers (loans to real estate developers) on a selective basis. AUM (Asset under Management) stood at INR 270bn as of 4QFY18 with a mix of Retail- 94%...

We recently met the management of Capital First (CAFL). The proposed merger of IDFC Bank (IDFCB) with CAFL is likely to fructify by mid-FY19, creating a financial services entity with total assets of ~INR1.5t. Over the next 5-6 years, the combined entity is likely to undergo a huge transformation - from a primarily wholesale-focused bank to a retail-focused bank with meaningful CASA deposit franchise. Currently, CASA deposits at IDFCB amount to merely INR43b - 4% of total liabilities. Bulk of the CASA has come in the past four quarters (post demonetization). The management's priority post-merger will be scaling up the CASA franchise.

CAFL reported a strong quarter, beating our estimates across parameters. PAT came in at Rs 870 mn (up 41.7% YoY; est. Rs 829 mn) marked by robust 31.8% YoY growth in AUM, 12 bps QoQ uptick in margin (calculated)

The Boards of IDFC Bank (IDFCB) and Capital First (CAFL) have approved a merger of the two entities at a 13.9:1 swap ratio. We believe this merger would have benefits for shareholders of both companies, though near term regulatory & integration challenges persist. The share swap ratio makes it attractive (~12.5% premium to CMP) for CAFL shareholders. Benefits to IDFCB shareholders will accrue more over a medium to long term perspective. On our proforma merged numbers, we expect ~20bp/200bp higher ROA/ROE for IDFCB by FY21. Without factoring in cost related synergy benefits, balance sheet realignment would drive 4-5% higher profitability for combined entity. While the merger would result in dilution of BVPS for IDFCB in the short term (INR41/44 in FY19/20E v/s INR48/51 earlier), we believe its growth and RoE profile would improve significantly post consolidation. We have a BUY rating on Capital First and revise target price to INR960 (earlier INR925) ??? 2.7x FY20 BV. We expect share price of CAFL to largely track the price of IDFCB in the ensuing quarters. We have a neutral rating on IDFCB.

We recently met management of Capital First (CAFL) at our Midcap Conference'. The company's growth prospects appear bullish to us. Given the strong performance in 1HFY18, coupled with better-than-expected demand in the festive season, AUM growth in FY18 should comfortably exceed management's guidance of 23-25% and could possibly be north of 30%, in our view. We expect 28% AUM growth, driven by growth of 50% in consumer durables (CD) loans and 30% in twowheeler (2W) loans. Management targets a 400-500bp improvement in RoE over three years from FY17 levels (12%). There are three key factors driving this improvement: (1) Improving...

Background: Capital First Ltd (erstwhile Future Capital Holdings Ltd) is a non-deposit taking NBFC with large focus on retail lending. Capital First provides loans to retail customers (in the form of secured and unsecured loans to small and medium enterprises (MSME), consumer durables loans, two-wheelers loans and housing loans) and corporate customers (loans to real estate developers) on a selective basis. AUM (Asset under Management) stood at INR 230bn as of 2QFY18 with a mix of Retail- 93%...

Capital First's (CAFL) 2QFY18 PAT grew 36% YoY to INR785m, in line with the trend of the past few quarters, driven by strong AUM growth, NIM expansion and stable asset quality. AUM growth of 7% QoQ/28% YoY to INR230b surprised us positively. Growth continues to be driven by consumer durables and 2W loans, which grew 64% and 40%, respectively. While LAP AUM increased only 12% on a YoY basis, sequential growth was 5%. We believe this segment can deliver 15%+ YoY growth from the next quarter. Over the past year, the share of LAP has declined 500bp to 40%. On the other...

While keenly waiting for demand recovery as GST pressures abate, Dabur India is aggressively looking to ride the ayurveda wave. Tie-up with Amazon will expand its global footprint

Background: Capital First Ltd (erstwhile Future Capital Holdings Ltd) is a non-deposit taking NBFC with large focus on retail lending. Capital First provides loans to retail customers (in the form of secured and unsecured loans to small and medium enterprises (MSME), consumer durables loans, two-wheelers loans and housing loans) and corporate customers (loans to real estate developers) on a selective basis. AUM (Asset under Management) stood at INR 198bn as of FY17 with a mix of Retail- 93% and Wholesale- 7%. The company has transformed into a large retail...

Capital First is a Warburg Pincus promoted non-banking financial company with AUM of Rs136bn. Its AUM has grown at 67% CAGR over last 5 years, albeit from a small base, led by shift in focus from corporate loans to retail financing. CAFL mainly provides financing for SME, consumer and two-wheeler sector and corporate loans. CFL was formed in 2012, by...

PAT rose ~49% YoY, inline with our expectation, supported by both strong NII growth (+47% YoY) and non- interest income (2x YoY).NIM rose to double digits for the first time at 10.1% (+71 bpsQoQ),as AUM mix skewed towards high-yielding assets(CD/2W).AUM growth (+24% YoY) though healthy, was not back

Capital First Ltd. (CFL) is a strong retail NBFC play with a differentiated business model and strong loan product portfolio with promising long term opportunities. It is well managed and engaged in retail segment i.e. MSME funding, Consumer Durables and 2W financing. Strong growth in AUM with diversified portfolio without any impact on asset quality is commendable. Backed by strong and consistent AUM growth, healthy capital adequacy position, changing borrowing mix, we expect RoAA/RoNW to improve by 33/588 bps respectively over the next two years. We believe CFL will command a higher valuation on the back of strong AUM growth, improvement in ratios, experienced management and with...

Share price of the Capital first has rose almost 94.33% after Union budget 2016-17 held on 28th Feb 2016, the stock was top performer among financial services sector. Share price of the...

CAFL’s 1Q performance played out well with strong AUM growth (36% YoY), NIM improvement (180/30bps YoY/QoQ) and lower C-I ratio (49%; - 220bps QoQ). However with higher provisions (towards LAP/Home Loans Rs 117mn and std. asset provisions Rs 66mn), earnings growth was restricted at 48% YoY. Shift to 120DPD, led to G/NNPA inch up to 1.2/0.6%, however with no impact on earnings. HDFC Securities Maintain BUY with a revised TP of Rs 749 (3.3x June-18E ABV of Rs 227).

of the fastest growing NBFCs in the country which has successfully created a niche position in MSME financing, a huge potential market but largely underpenetrated. Future Capital...

Strong growth in AUM with focus shifting towards retail loans: CFL has witnessed AUM growth of ~25/44/66% CAGR over the last 3/4/5 years driven by strong growth in retail assets portfolio. In line with the company strategy of focusing on MSME and Retail loans the wholesale loan book has largely remained more or less flat over the last 4-5 years at ~Rs 2000 cr while the MSME and retail loan book has grown at CAGR of 43% over FY12-FY15. We expect the company to maintain its growth rate of ~25% over FY15-FY17. The management has guided for an AUM of Rs 28000 30000 cr by FY19 which implies CAGR of ~23-25%. Rigorous credit underwriting process to maintain asset quality:...

Buy Capital First ltd Between at Rs.380 - Rs.350 for the target of Rs.440