Target: ₹245
CMP: ₹189.10
We initiate coverage on with a Buy rating and a target price of ₹245, valuing the stock at 2.3x FY28E P/B. Established in 2011, CGCL is an emerging diversified NBFC with a strong retail orientation, with about 80 per cent of its portfolio in retail segments, and it operates a 100 per c ent secured lending franchise.
Post Covid, the company capitalised on rising gold prices and entered the Gold Loan (GL) segment in 2022, followed by the launch of Micro-LAP in 2025, a segment witnessing strong industry traction. CGCL’s current portfolio mix is MSME (21 per cent), GL (38 per cent), HF (22 per cent) and CF (18 per cent).
Beyond lending, CGCL operates a car loan origination vertical, which is a pure sourcing business contributing stable non-interest income. The company began co-lending in 2021, and currently about 20 per cent of AUM is in co-lending/DA structures, providing a meaningful boost to income over the past 4 years. We believe CGCL’s ability to diversify income and hedge against NIM pressure differentiates it from peers.
Asset quality remains best in class, with GS3/NS3 at 1.3%/0.7% as of 2QFY26, underpinned by its fully secured book.
We expect AUM CAGR of ~35% over FY25–27E, supported by operating leverage benefits and steady credit costs of ~0.5% post FY26E, driving PAT CAGR of ~62% during FY25- 27E. This translates into an average RoA/RoE of 3.6%/15.6% over FY26E–FY27E.