Capital First Ltd Research Report By Prabhudas Lilladher

Capital First (CFL) is Warburg Pincus promoted systemically important NBFC. The company offers MSME loans, two-wheeler & consumer durable financing and wholesale loans. CFL has steadily increased the composition of retail financing from 10% in FY10 to 84% currently, while it has grown its AUMs at 25% CAGR over FY12-FY15. It is well capitalized at 23.5%, has robust asset quality with Net NPL ratios at 0.17% and is rated AA+ by the rating agencies. We estimate company’s return ratios to improve over next two years as operating leverage increases and estimate RoE to expand by 520bp to 13.5% by FY17E. We value the stock at 2.0x FY17E ABV at Rs425 per share. We initiate coverage on the stock with an ACCUMULATE rating.

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