Capri Global RI review - (Apply)

•    CGCL is an NBFC providing investment and credit-related services. 
•    It offers a wide range of loans to MSMEs, self-employed and first-time borrowers.
•    For the reported periods, it has posted fair financial performance.
•    The RI is at around 31.8% discount to its last traded price of Rs. 696.70.
•    Investors may lap it up for medium to long-term rewards.

ABOUT COMPANY:
Capri Global Capital Ltd. (CGCL) is an NBFC - Investment and Credit Company and a Systemically Important Non-Deposit Taking NBFC. Its wholly owned subsidiary, Capri Global Housing Finance Limited ("CGHFL"), is an HFC. Its housing loan business is owned and operated by CGHFL.

The company primarily caters to MSMEs, self-employed non-professionals and first-time borrowers that lack access to formal credit channels, while contributing to India's financial inclusion agenda and "Housing for All by 2022" mission under Pradhan Mantri Awas Yojana ("PMAY"). As of December 31, 2022, it had (i) 24,564 loans to MSMEs outstanding and (ii) 21,523 housing loans outstanding, out of which more than 6,630 were under the PMAY initiative.

CGCL offers a wide range of loans through its five lending verticals: (1) MSME loans; (2) housing loans; (3) construction finance loans; (4) loans to other NBFCs and loans against pledge of debt securities to borrowers dealing in debt securities ("Indirect Lending") and (5) loans against gold (gold loans). It is also a corporate selling agent for third-party new car loans. As of December 31, 2022, it had 7983 employees on its payroll. 

ISSUE DETAILS:
The company is coming out with a rights issue (RI) of 30315789 equity shares of Rs.2 each at a fixed price of Rs.475 per share to mobilize Rs. 1440.00 cr. The company is offering RI in the ratio of 11 shares for every 64 shares held by the eligible stakeholders as of the record date of February 17, 2023. The issue opens for subscription on February 27, 2023, and will close on March 10, 2023. The full amount is to be paid on the application for the number of shares applied. Post allotment, shares will be listed on BSE and NSE. CGCL is spending Rs. 11.00 cr. for this RI process and from the net proceeds, it will utilize Rs. 1429.00 cr. for augmenting the capital base. 

ICICI Securities Ltd. is the sole lead manager and Link Intime India Pvt. Ltd. is the registrar of the issue.

Post-RI, CGCL's current paid-up equity capital of Rs. 35.17 cr. will stand enhanced to Rs. 41.23 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 9792.26 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, the company has (on a consolidated basis) posted a total income / net profit of Rs. 737.14 cr. / Rs. 176.96 cr. (FY21) and Rs. 981.79 cr. / Rs. 205.04 cr. (FY22). For 3Qs of FY23, it earned a net profit of Rs. 139.76 cr. on a total income of Rs. 1010.88 cr.

As of December 31, 2022, its current paid-up equity capital of Rs. 35.17 cr. is supported by free reserves of Rs. 2029.25 cr. and a NAV of Rs. 115.12 per share. 

DIVIDEND POLICY:
The company paid a dividend of 20% for FY21 and 25%for FY22.  It will adopt a prudent dividend policy post listings of RI shares based on its financial performance and future prospects. 

SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 531595 (FV Rs. 2).
The scrip last closed on cum-right basis at Rs. 753.70 on February 16, 2023, and opened on an ex-right basis at Rs. 700.00 on February 17, 2023. Since then, it has marked a high/low of Rs. 715.00 / Rs. 690.10. The scrip last closed at Rs. 696.70 as of February 24, 2023. For the last 52 weeks, it has posted a high/low of Rs. 784.80 / Rs. 512.50. The promoters' holding has been slightly down at 74.64% for the last quarter ended on December 31, 2022, against 74.68% for the previous two quarters. The counter is well managed above the RI pricing.