Accumulate Capital First; target of Rs 329: Geojit

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26 Aug, 2025 12:21

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Geojit BNP PARIBAS research report on Capital First

Capital First Ltd (CAPF) transformed its business model in last 3 years by streamlining its focus towards retail finance (SME and Consumer). Retail – wholesale (corporate) loan mix currently stands at 80:20 v/s 10:90 in FY10. With this transformation, CAPF delivered healthy loan growth and interest income during a sluggish economic phase. The loan book grew at 48% CAGR during FY10-14 with retail loan growing 200% and wholesale 21%. Net Interest Income (NII) grew at 58% CAGR during the same period. CAPF received housing finance license in FY14 and has huge long term growth potential. With the revamped business model maturing and high potential loan mix, CAPF is likely to sustain the loan growth momentum and deliver robust earning. Through a preferential allotment in Q4FY14, CAPF raised Rs 1.78bn to fund capital.

CAPF is currently trading at one year forward P/B of 1.8x which is ~30% premium to its last 5 year average. P/B valuation de-rated from its peak P/B valuations of 3x with business model change. We factor a possible re-rating in P/B valuations post the business model maturing and a stable future growth. Factoring a CAGR of 56% & 8% in consolidated EPS and BPS respectively, we value at 2x FY16E P/B and recommend ACCUMULATE with a target price of Rs329.

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