Capri Global Capital Ltd (NSE: CGCL) Q3 2026 Earnings Call dated Feb. 02, 2026
Corporate Participants:
Rajesh Sharma — Managing Director
Hardik Doshi — Head of Corporate Finance & Investor Relations
Analysts:
Unidentified Participant
Aman Bbaheti — Analyst
Sohail Kanalil — Analyst
Varun Dubey — Analyst
Ishank Gupta — Analyst
Prit Nagersheth — Analyst
Vikramaditya Gajbar — Analyst
Sagar Shah — Analyst
Ninad Jadhav — Analyst
Mokshanki Sanghvi — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to Capri Global Capital Limited Q3FY26 earnings conference call home hosted by Goindia Advisors. As a reminder, all participants line will be in listen only mode and there will be an opportunity for you to ask questions after the. Ladies and gentlemen, good day and welcome to Capri Global Capital Limited Q3FY26 earnings conference call hosted by Goindia Advisors. As a reminder, all participants line will be in listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing Star then zero on your touch tone phone.
Please note that this conference is being recorded. I now hand the conference over to Mr. Hardik Doshi from Capri Global Capital Limited. Thank you. And over to you sir.
Hardik Doshi — Head of Corporate Finance & Investor Relations
Thank you. Good afternoon everyone and Warm welcome to Q3FY26 earnings call for Kepri Global Capital Limited. This is Hardik Doshi, Head Corporate Finance and Investor Relations. Before we begin, as a brief disclaimer. The discussion on today’s call regarding Capri Global Capital Limited’s earnings performance is based on judgment derived from the declared results and information on business opportunities available to the company. At this time, the company’s performance is subject to risks, uncertainties and assumptions that could cause results to differ materially in future. In that context, participants on today’s call are advised to consider the same while interpreting the results. The full disclaimer is available on Slide 63 of the Earnings presentation. Participants are requested to kindly take note of the same format of the Today’s call would be opening remarks by the management team followed by Q and A.
Let me now introduce the management team for the Capri Global Capital present on the call today. With us Today we have Mr. Rajesh Sharma, Managing Director and Promoter Ms. Divya Sutar, Executive Director, Strategy Mr. Kishore Loda, Chief Financial Officer and Mr. Sanjeev Srivastava, Chief Risk Officer. I would now request our Managing Director Mr. Rajesh Sharma to present his opening. Remarks on the results. Over to you sir.
Rajesh Sharma — Managing Director
Thank you. Good afternoon everyone. I hope you all are doing well and had a good new year there. We announce our unit financial results for the third quarter of FY 2026 on 29 January. I trust you have had the opportunity to go through our earnings presentation which is also available on our website. Before I move on to the financial and operational highlights, I would like to touch upon the broader operating environment during the quarter. India’s economy continues to demonstrate resilience amid A mixed and uncertain global backdrop. Domestic demand remains steady, financial conditions and government schemes are supportive and budgetary push for infrastructure spending, indigenous manufacturing and service sector will drive the consumption and credit growth.
India is expected to be among the fastest growing major economies in FY26, underpinned by a stable inflammation trajectory and strong structural fundamentals. At the same time, the macro environment continues to be affected by external headwinds including geopolitical issues, global market volatility and currency movements, underscoring the need for disciplined execution and prudent risk management for financial institutions. Against this backdrop, I am pleased to say that Capri Global delivered a strong quarterly performance in Q3FY26, continuing its growth momentum and maintaining asset quality while delivering highest ever quarterly profit of rupees 255 crores, a 99% increase year on year.
This performance reflects our strong execution capability and resilient business model even during the uncertain macro conditions. Now coming to our detailed business and earning performance during the quarter. The strong momentum we saw in the first half of FY26 continued through the third quarter across all our lending businesses. As of December 31, 2025 or consolidated AUM stood at Rs. 30,406 crores reflecting a robust 47% year on year growth and 12% quarter on quarter growth. This performance was underpinned by broad based expansion across segments. Gold Loan grew an impressive 80% year on year while housing loan rose 40% year on year.
Our co lending AUM surged 93% year on year to Rs 7,138 crore now accounting for almost 23.5% of total AUM up from 21% in Q2FY26, highlighting our strategic focus on capital. Efficient growth investments for the quarter rose 87% year on year to Rs 10,879 crore supported by a widening distribution network and growing customer base. Our growth remains granular, diversified and retail led with our customer base now exceeding 6.3 lakhs, reaffirming the scalability in resilience of our business model. For our Gold Loan business we delivered a strong and well balanced performance in line with our strategic objective of growth driven by branch expansion while maintaining focus on effective risk management.
We successfully met our branch expansion target with the net addition of 68 new branches across South India. While last quarter we focused on deepening our presence in existing geographies. This quarter we marked our entry in high potential new geographies of Odisha, Andhra Pradesh, Telangana and Karnataka to support the next phase of growth. Gold Loan AUM saw robust growth increasing from Rs 10,170 crore at the end of September to Rs. 12,555 crore by December, a sequential increase of 23% led by healthy customer demand and improving branch productivity. In the context of rising gold prices, we maintain conservative loan to value ratios while ensuring strong collection practices across the portfolio.
Asset quality remained a key focus. Our gold loan growth NP excluded 0.39% end of December, underscoring our focus on risk management and portfolio quality even amid rapid growth. Overall Q3 marked an all round performance for the gold loan business combining scale alongside strong credit discipline and operational execution. With branch productivity increasing to Rs. 14.1 crore AUM per branch, our MSME AUM grew to Rs. 5,886 crore up by 19% year on year supported by steady execution and network expansion in the msme business. All 16 branches in Uttar Pradesh reopened in Q2. FY26 are now fully operational by December end.
These branches have achieved monthly disbursement of rupees 9.5 crore and we expect this to cross Rs. 20 crore per month by March. During the quarter we also commenced MSME operation in prime urban markets such as Mumbai, Pune and Delhi which will help diversify and strengthen our overall customer risk profile within MSME. Our Microlab business continues to gain strong traction with AUM rising to Rs. 650 crore. This vertical enabled us to serve emerging self employed borrowers with smaller ticket size requirement in microlab. We added 14 branches during Q3 taking the total branch network to 151 branches end of December end.
Our immediate focus now in this segment will be on improving sales productivity and operating efficiency across the expanded network before undertaking the next phase of branch expansion. Housing AUM stood at Rs. 6,490 crore delivering a year on year growth of 40%. We continue to see resilient demand across the affordable housing segment where rising income level and lower interest rate regime are driving demand for housing loans. With net addition of 18 branches, we further expanded our presence in high potential South India market by entering state of Andhra Pradesh and Karnataka. This strategic expansion is stepped towards becoming a national player in housing finance, increasing portfolio granularity and support yield expansion over time.
Our construction finance agent saw steady growth of 37% year on year to reach 5109 crore. Now funding over 279 active residential projects with an average ticket size of rupees 37 crore sanction wise and outstanding portfolio ticket size of rupees 18 crore. The book remains granular and well diversified by geography reflecting our focus on working with mid sized and small developer in Metro and Tier one cities. We continue to emphasize discipline underwriting through rigorous due diligence and escrow based cash flow management ensuring a risk first approach. Our total branch network expanded to 1331 locations in Q3 FY26 with a new addition of 107 branches during the quarter while our employee base increased to increase to 13,066 up by 7% quarter on quarter.
Our entry in new geographies is a step towards our ambition of building a Pan India footprint, enhance customer reach and and increase brand visibility, laying the foundation for the next phase of growth. Let me now provide an update on our core earnings. Our yields and spread on NAT advances remained healthy in the quarter with the 16.4% and 7% respectively driven by continued loan book expansion, decline in cost of fund and enhanced margin. Our net interest income for Q3FY26 stood at Rs. 510 crore representing a strong 48% increase on year on year. We continue to strengthen our non interest income stream in Q3 FY26 reinforcing our strategy of building a diversified and resilient earnings profile.
Non interest income grew 124% year on year and 18% quarter on quarter to rupees 240 crores contributing 32% over net total income for the quarter. This strong increase was largely driven by growth in commission of insurance distribution and co lending fee income in our insurance distribution business. We generated fee income of rupees 34 crore during the quarter. Q3 marked an important strategic milestone with the deployment of the upgraded capricare insurance ecosystem. During the quarter we unveiled a refreshed brand identity and fully digital end to end platform that enables instant real time policy issuance, significantly easing insurance adoption across our retail customer base.
More importantly, we expanded our product portfolio beyond traditional financial indemnity product to a holistic wellness led offering by embedding preventive health care solutions such as annual health screening and cashless consultation into the ecosystem. Capricare is evolving from a client driven product offering into a proactive health and protection partner for our customers. This digital first and integrated approach is expected to drive higher insurance penetration, improve customer engagement and meaningfully enhance fee income contribution over time. Our core lending income is 216 crore driven by higher disbursal volumes and deeper engagement with partner banks. This capital efficient model continues to enhance roe, diversify funding sources and scale feeble income without incremental balance sheet strain.
Our car loan distribution business maintained its steady momentum with origination of rupees 3290 crore in Q3FY26 up to 3% year on year. With a growing footprint and deep relationship across 14 partner banks and financial institutions, they built a Scalable platform with 10 India Network in this segment with potential to monetize further for distribution of other products. On the expenses front, our operating expenses increased 15% quarter on quarter. This was mainly driven by increasing the employee cost on account of that addition of 869 employees cost and increase employee incentive length with higher reserve. Our continued focus on operating efficiency is visible with the cost to income ratio improving 51.6% in Q3FY26 compared with 58.2% in Q3FY25.
This sharp improvement underscored the benefit of a maturing branch network, rising productivity and strong operating leverage across our business as a result of margin expansion, improvement in operating efficiency and a strong traction in fee income, our pre provision operating profit surged 92% year on year to Rs. 363 crore for the quarter. Further, we continued our strong Profitability Momentum in Q3FY26 delivering a robust path of Rs. 225 to 55 crore up 99% year on year. Our return ratio considerably improved during the quarter with ROE of 15, ROE of 15% and ROE of 4% for the quarter.
Coming to our asset quality, our impairment cost for the quarter is 2 days rupees 23 crore in Q3FY26 down from 31 crore in Q2FY26 or 0.4% of the gross loan book and our provision coverage ratio on stage three loans improved to 43.6% demonstrating our prudent provisioning and conservative approach to risk management. Our stage two asset increased by rupees 95 crore quarter on quarter and worth 4% of gross loans. However, our stage three ratio improved quarter on quarter for Gold loan, Housing Loan, Construction finance and remained flat for for MSME loan. At consolidated level our stage three asset remained flat at rupees 275 crore quarter on quarter resulting in our gross stage three ratio at 1.2% down sequentially by 10 basis while net stage three ratio stood at 0.7% down seven days sequentially.
Let me talk about liability side. Our borrowing increased by 38% year on year, an incremental borrowing sanction limit. Year to date this fiscal was around 6,860 crore. We added 11 new land relationships here to date taking the active relationship now to 30 plus. We also continue to diversify our borrowing mix by raising funds through other instruments such as NCDS and commercial paper. During the quarter we raised rupees 635 crore from NCDs and commercial paper as a result of Ms. Reduction in our sales on repricing existing liabilities. We are happy to share that we saw quarter on quarter reduction of 24 basis in our cost of fund following equity capital infusion of Rs 2000 crore in Q1FY26.
Our balance sheet is now significantly stronger with the low leverage ratio of 2.8x providing ample headroom to support accelerated growth across business segments. Our standalone capital adequacy ratio of CGCL is at 30.3% and 24.8% for Capital Housing Finance Ltd. Our liquidity remains comfortable with rupees 4274 crore rupees in cash and bank balances, investments and undrawn credit lines across CGCL cghfn. Our technology investments continue to deliver tangible outcomes and to understand the sustainability of these numbers need to look at the engine powering them. Four years ago we began rebuilding CAPRI as a platform centric and BFC and that decision is now generating exponential operating leverage.
Our performance is not just the outcome of incremental manpower, it is also the product of scaling our systems. Our in house technology stack deliver higher disbursement, sharper credit selection and shorter cycle times all without a proportional rise in cost. Our disbursements are up 87% year on year. However manpower has increased by just 19% year on year driven largely by the addition of 265 new branches year on year rather than rise in core operating load. This is the compounding effect of AI native operating model 1 where productivity is speed and the risk discipline accelerate together and where growth is driven by architecture not headcount.
We have built an AI first landing platform from the ground up and embedded at the core of our credit architecture made around the critical element of clean governed continuously in this data, the customer journey runs on a fully native seamless flow from digital onboarding through our mobility app called Spark into a centralized loan original system called Orion that orchestrates complex workflows end to end. This foundation delivers insight, speed and risk precision that legacy vendor led ecosystem cannot match. This distinction is most visible in our proprietary intelligence model Sentinel for credit and Chronos for collections. Credit model acts as a vigilant guard moving us from static scoreboard to dynamic risk compliance while collections model drive time driven escalation aligned to delinquency.
Aging our agentic communication stack across voice, WhatsApp, SMS and Gen AI bots now manages customer engagement end to end. It sends nadia automatically analyze call transcripts, detects early risk signals and triggers the right action instantly creating a real time high accuracy feedback loop across the collection funnel. On ground our field collection executive operates on a specialized geotagged mobility app called Pegasus, ensuring fast moving wide coverage execution by optimizing routes and tracking widgets in real time. This structurally lowers the cost of collections and improvements cure rates without expanding our feet on the street workforce. Underpinning this capability is a robust hybrid multi cloud strategy unified data foundation that feeds our real time executive dashboards called GUIs, ensuring that decisions regarding funnel visibility and asset quality are backed by live data.
We have modernized the entire application development life cycle by embedding artificial intelligence in every Stage driving an 83% year on year improvement in employee to PR code productivity. With AI driven automated reviews and agentic testing framework we have brought our error rate down to below 5% supported by 4 time increase in code coverage year on year. As a result we are delivering new features faster with higher reliability and with leaner teams giving us a sustained execution advantage. This velocity translates directly into business outcomes and customer experience. Consequently products like Gold Loan have turnaround time of less than 30 minutes and our pre approved top up loans are disbursed in 60 seconds.
We are monetizing trust and leveraging the India stack to acquire and verify customers is very low cost. Importantly, we have ensured that speed does not come at the expense of governance and and is aligned with regulatory guidelines. The Technology foundation is in place. The systems are mature and are built to compound earnings at scale. On the ESG front, I am pleased to share that our ESG practices have been recognized by leading global independent rating agencies including SNP Global and Morningstar Analytics. CAPRI Global has issued an SNP ESG score of 71, the highest among all NBSC peers and has been assessed as low ESG risk by Morningstar sustainolytics.
These ratings place us firmly among the leaders in ESG practices within the NGFC sector and reflect our adherence to globally benchmark standards. Importantly, these assessments are based entirely on publicly available independently verified data, underscoring the strength, transparency and resilience of our governance and operating model. We shall now be happy to take your question.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a Question may press star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Aman Mahendi from Ingrid Capital. Please go ahead.
Aman Bbaheti
Hi. Thank you for the opportunity. Am I audible? Yes please. Hello. Yeah, hi. Hi sir. So my first question is with our. Ongoing investments in distribution how should we. Think of benchmarks like AUM per branch per employee that signal our transition from bailout to operating leverage in gold and microlab businesses?
Rajesh Sharma
Yes. Thank you. So as far as the Aum per branch is concerned, gold loan as we have narrated in our call also that it has already crossed 1 14.1 crore per branch AUM and we expect this golden AUM continue to grow in line with our. There are many branches which are still less than 10 crore. While the area is 14 where some of the branches are about 25 some of the branches are below 10. So there exists a good scope that these branches will continue to deliver 30% plus growth. Plus we intend to add more branches.
So currently if you talk about 910 branches there are about 20% branches are more than 20 crore per branch. Between 5 crore to 20% branches almost there are about 67% branches and there are some newly opened branches. We opened the last two quarter less than five crore rupees. So those branches will continue to grow. Plus we we also intend to add the new branches. So the existing branches will also continue to grow with the addition of the opening of the new branches. So per branch AU we can expect we are at 14.1 and these existing branches will continue to grow for 30%.
And then there will be addition of the new branches. If we talk about Microlab which we are opening about 151 branches currently the EU is about 650 crore which is about roughly about close to 5 crore plus. These branches will deliver EU about say 10 crore rupees by the next year. And we intend to achieve 3,000 crore rupees in about another two and a half years from now. So that is the trajectory we are following.
Aman Bbaheti
Okay sir. Okay sir. Thanks for that. It was very helpful. So second question is in line with our portfolio mix. So as we are seeing a shift. From. Traditional lending towards gold loans and co lending but our NIMS have remained largely unchanged. I mean so what’s the outlook there. On gold loan yields?
Rajesh Sharma
Gold loan yields are currently in the range about 17.8% and overall if you talk about the overall yield of the company it is about 16.4% at the portfolio level. With the increase slightly in the gold loan portfolio the ORI yield and spread will improve. Plus micro lab segment is also increasing there the yield is also going to be supportive. We expect the gold loan to remain in the range about 18%. Likely there will be improvement about 2025 basis going forward by various retail loan gold loan focus. We are bringing in now increasing the smaller branches so there we should see some improvement in our yield plus certain other measures we are taking.
So overall gold yield is likely to be 18% and our overall yield of the company which is 16.4% should improve slightly. It should improve by 10 to 20 basis in next year.
Aman Bbaheti
Okay sir, thank you. Thank you so much.
operator
Thank you. The next question is from the line of Sohail Kanal from ULJK Financial Services. Please go ahead.
Sohail Kanalil
Good afternoon everyone and very good. Congratulations for the good performance in this quarter. I had a couple of questions to ask. So basically we have seen go lending has been scaling faster from 20% to 23.5% in Q3 and how do you. See the shape up going ahead? Do we keep increasing further on?
Rajesh Sharma
I think co lending will remain largely in the current range of between 20 to 23%. We do not intend to grow it further from this level and we are able to maintain this is very good level to have it. It’s a very high highly roe accretive and there’s a focus of regulator as well as the banks to partner in the co lending so that it is a collaboration between the low cost fund and the low cost collection efficiency of NBFC low cost fund of the bank but we intend to maintain this level.
Sohail Kanalil
Got it. And one more question I had regarding so how the gold loan prices have. I mean the gold prices itself has. Gone up significantly in the last few. Quarters and right now being in it is at peak. So if we see further downside in gold prices what kind of scenarios have. You embedded for your loss and provisioning? Have you done for that?
Rajesh Sharma
Yeah, so I think it’s a very good question in the recent times of the recent price volatility of the gold loan. But as a company we follow the very conservative practice in terms of the way we decide the LTV in the rising trend of the gold. We reduce our LTV during the January whatever we disburse our loan disbursement happening in the LP about 64% against the 75% permitted and the portfolio level our LTE is 60% overall so it means we have a portfolio level 40% margin in the current trend. So second thing is that the moment we also system that early warning triggers we are able to send to the customer through SMS and WhatsApp messages in case anybody’s ltd breaches and at individual level where the loan amount is anything between 50,000 rupees to 2 lakh rupees if the gold prices have fallen and the margin call trigger we send a message and we manage the dynamic collateral monitoring where we monitor the portfolio and individual loan account systematic wise, system wise and take the prompt corrective action.
Borrowers are required to restore the margin within 14 days of intimation limiting prolonged exposure during period of price correction and then we retain the right to our agreement to initiate action of place gold including prior loan maturity if collateral coverage becomes inadequate or borrow risk increases materially. So there are various safeguards in Bilt if you talk about currently as I said in the January month our oil disbursement where we are taking the. We have disbursed the loan where the EU was only 64% so 36%. The margin we were maintained during the time when the gold was going up one way between December and January we were maintaining our Fed decision LD not 75 but between 70% to 72%.
So there also we have taken a conservative approach. Also the gold loan landing happening on the 30 day last 30 days average price accordingly Ray program is deciding so basis all these frameworks we are at quite comfortable position where the LTV is just 60% at a portfolio level.
Sohail Kanalil
Got it. So I think the book has been very well managed. Thank you. Thank you sir, this has been very helpful.
operator
Thank you. The next question is from the line of Varun Dubey from Share India Securities. Please go ahead.
Varun Dubey
First of all sir, congratulations on your superb set of numbers. I mean the company has shown really good growth. If you can just come right on what was the reason for decline in the overall latent cash margin to 9.1%. And although the company has said that the overall spread would reach to 7.2% going forward. So I mean does the company stay with the same guidance for spread as well?
Rajesh Sharma
I think what is the relevant indicator to track is the spread and the spread have not come down. Spread has improved from 6.9 to 7%. So there’s improvement in the spread and our margin because net interest margin concern the more you leverage net interest rate will fall. So I think right indicative spread where we are showing improvement of 10 basis from 6.9 to 7%.
Varun Dubey
Okay, sir, but you have guided for 7.2%. I remember in the second quarter. So do you stay with the guidance of 7.2% and will we see more 20 basis point improvement is spent in the fourth quarter?
Rajesh Sharma
Yes, there will be improvement in the fourth quarter in the spread further on the back of our assume of the Gold loan rising, some support will come from the scale benefit and also from the cost of fund is going down. So already we reduced about 24 basis cost of fund down in the last quarter. Some of the loan will get further reset and the mix of borrowing of the short term commercial paper and other measures. Our overall spread will continue to improve. And I think we given a guidance of Sandpoint to which we hope to deliver that.
Varun Dubey
So one last question I just wanted to understand on your Gold Loan branches because I remember you saying 995 branches was a target for FY26. I mean what would be the, you know, addition for Gold loan branches in FY27? I think so. They will separate. Are they approval that the company needed for additional branches? So what’s the update on that, sir?
Rajesh Sharma
So I think the branches which we’ll add in the last quarter of the Gold Loan will let them stabilize and achieve at least six months time, will approach the RBI at appropriate time and RBI give their approval and decision within 45 days. So in the second half of FY27 we’ll announce the expansion of our Gold Loan branches based on what time we approach and subject to our approval and program and accordingly we’ll announce at right time how many branches we’ll be adding in the second half.
Varun Dubey
Okay. Thank you sir. Thank you for asking the questions and once again congratulations on your setup number. Thank you.
Rajesh Sharma
Thank you.
operator
Thank you. The next question is from the line of Ishan Gupta from Choice Institutional Equities. Please go ahead.
Ishank Gupta
Hi sir. Good afternoon. So my first question was for known Gold Loan segments that we have already observed a sharp decline in yields. So what was the primary reason? Was it because of higher competition or. And I couldn’t hear properly. So could you reiterate means what. What is the expansion we are seeing in the yields of Gold Loan.
Rajesh Sharma
As far as expansion is concerned by current quarter we’ve been handing up 999 branches of the Gold Loan. And last quarter we have seen we added about 68 branches in the Gold alone. As far as the yield is concerned, the decline in the yield in Q3FY26 compared to Q4 Q2FY26 is directly linked to our strategy of expanding the retail loan book with a particular focus on a smaller ticket size loan. In rural markets this shift has been effective in driving customer acquisition and enhancing market reach but it naturally result in lower average ticket size and a slight compression of the yield.
Furthermore, the rural market has seen improved cash flow availability due to the harvesting cycle, allowing customers to make timely repayment access, rebate schemes and remain within the lowest ROI brackets. However, next quarter we expect the Yield to improve by 20 basis or so.
Ishank Gupta
And any further expansion in ’27 and ’28?
Rajesh Sharma
’27, ’28 we will go to our regulator for the approval and second half we’ll announce our phase of expansion the golden branches first half we will try to make our existing branches Open in last 34 months to make them grow and achieve the breakeven and thereafter we go through the next expansion round.
Ishank Gupta
And sir, what about the expansion in other branches other than Gold loan? What do you pencil in for FY27 and 28 other than gold loan?
Rajesh Sharma
So in the MSME, Microlac and Home Loan we are continuously eding. So next year we can assume that between 100 and 125 branches across microlap, MSME and home loan we will add.
Ishank Gupta
Understood. So for taking further on the point of MSc MSME sector the government has continues its stance of supporting the MSME sector. So based on that can we assume our exposure towards MSME should also improve? So what would be the AUM mix within next one to two years?
Rajesh Sharma
So you have seen this quarter also overall we have shown the 19% growth in the MSME segment. So if you talk about the composition of AuM currently gold is about 42% and it will improve to about 45 46. As regards MSME and construction, finance and housing is concerned they will largely remain in the range about 18 to 20% each one.
Ishank Gupta
Understood? Understood. And sir, we have already reached our exposure to 40% so we are currently penicilling 45% as the exposure towards gold loans. So currently the gold prices have already witnessed high volatility in January. So do you see a good growth based on it if the prices do fall further or has volatile in Feb and March?
Rajesh Sharma
So even though some price correction which you’ve already seen happening, but on ground still the larger market of the gold or still exit in the informal segment because the small money lender and the small jewelry show who also do the lending activity, that market is continue to shift to the organized sector because of the fair practice and the Better interest rate. I believe that still lot of market which is going to shift from the informal to formal and we’ll see decent growth in the gold loan segment in the coming years.
Ishank Gupta
Yeah, that was it from my side. All the best for the next quarter.
operator
Thank you. Participants who wish to ask question you may press star and one at this time. The next question is from the line of state from wealth Advisors. Please go ahead.
Prit Nagersheth
Yes, so my question is that given that the borrowings announced in the budget is going to be more and this will increase the this will result in higher yields for government finances. Do you see an increase on cost of funds for the company because of that for FY27?
Rajesh Sharma
So I put it this way that across the level if the cost goes up then by all the lenders that is actually get passed on to the borrower. But any cost reduction happens because of a better credit rating or otherwise that benefit accrue to us. So in case the cost goes up, we will be able to pass on because that will happen for every lender and that cost will of course will get passed on the customer. So that will not change our spread. However, any cost reduction which we achieve because of our mix of borrowing by using the shop short term instrument like commercial paper or short term entry or by improvement in credit rating these two features that benefit will directly execute the P and L.
Prit Nagersheth
So what happens in. The case where banks who are competing with gold loans and companies like Kathri Global for them their cost of funds do not increase as much as they will be for an nbfc. So because of heightened compensation could this result in the yield on gold loans coming down?
Rajesh Sharma
So in any case banks are lending it less than 10% and the gold loan NBFC are lending anything between 15% to 18% rate. So already that difference is there. But the customer segment of the bank and NBFC is entirely different. Second thing focus of the gold loan NBSC is 12 only on the gold loan customer where the banks do many other products also. So attention to the customers customer service to these small borrowers borrowing 3000-040000-50000 rupees for a six month loan where banks margin are not even 500 rupees. The service and attention of the NBFC is going to be the key differentiating area.
It is not that the banks are not lending today’s low rate so that 25 basis here and there is not even the today difference is more than 500 basis point. But still all the gold loan and BFCs are continued to grow. So I Think that is not the factor of rate of interest. What rate banks are lending, what rate we are lending. They are entirely two different segment of customers.
Prit Nagersheth
Got you. The other question I had was regarding the gold ntd. So you explained right now regarding the prior participant, the question I wanted to ask was that till what price of gold are we comfortable after this if it falls, we will. We would have to start. You know, as you explained, you’d have to start calling customers and managing that. So what kind of price fall would you still be okay with?
Rajesh Sharma
So you have to understand it is like this that a customer whom we are given a one lakh they say one against the gold of one lakh rupees. We given a 75,000 rupees of loan. That is a regulatory limit. But our portfolio currently sitting at 60. It means that our portfolio is already at 60,000 rupees. Assuming that somebody we have given the loan in the month of January when the gold loan prices have gone up 10% again and follow more than 10%. That time you were having a loan to value not 20%. But we are following a loan to value of only 65%.
So 35% margin you are taking Even though gold loan prices fall 10% still that till then it will remain within 75% range. The moment is LTV change where the LTV exceeds Because of the reduction of the gold loan value beyond 75% support some customers. LTV has begun 78% 79% on a particular day 4% breach in a 75,000 rupees loan. Which means that 3,000 rupees we have to recover from him from the system. Auto message will be sent to the customer that your LP has been breached by this in this amount within 14 days if you don’t restore the margin, he has a right to auction the gold.
Plus it will also invite the panel charges in this and that customer is being called by the branch and SMS is already sent to him and recovery is done. So customer is also. It is not that in one day 25% correction will happen and we are out of the money. Correction will happen gradually and there is a educate system based alert and calls are triggered and recovery is made from the customer. Individual customer. We have to collect four five thousand rupees only to make up that margin. In the worst scenario we will end up in selling the gold and realizing our money being ticket sized, being so granular and the risk is so diversified. This does not pose a real risk in terms of recovery. Gold being so liquid and gold is the only Asset class where customer part with the position and remain in our custody.
So there is no process of taking the position, something like that. In real estate where gold is in our position, we can sell and reliable. So there is no real risk. Any such.
Prit Nagersheth
Gotcha. Gotcha. The other question I wanted to understand is that what kind of growth momentum did you foresee for quarter four and also for the next financial year? If you can give some guidelines.
Rajesh Sharma
I think we. We have said that this year we will see continue to deliver a growth to be in the range of about 33,000 to 34,000. And we are on that track already. We achieved 30,400 crore this nine month period. And we will continue to grow next year. We have revised our guidance to deliver anything between about 43 to 44,000. Earlier we said that we will achieve September 50,000 crore AUM by FY28. Now that guidance will revise to reach to 55,000 crore by FY28.
Prit Nagersheth
So alongside this growth, do you have any targets for your ROAS and ROEs?
Rajesh Sharma
We already delivered in this quarter 4% ROA and we continue to maintain that our aim will be to deliver ROE in the range about 16% plus and ROE anything between 4% to 4.25%.
Prit Nagersheth
Wonderful. Thank you. All the best.
operator
Thank you. Anyone who wishes to ask a question may press star and 1. The next question is from the line of Mr. Bansal from NBZ Investments. Please go ahead.
Unidentified Participant
Yeah, my question is on the this gold loan ratio. While answering the earlier participant questions you said that you have a margin of around 35 to 40%. But I see a presentation there. You said that you know your loan to value ratio is around 72% which means that you have the margin of around 28 to 30%. So can you help me understand what is this? Two things.
Rajesh Sharma
So what I think you have seen the slide number eight, the incremental dispersal. Okay, so incremental disbursement all three months. If you see in Q3 FY26 showing is 72% now 72% thereby. It would mean that on the day when we disburse. Suppose we disburse in the month of November and gold prices have gone up thereby it would mean that my LP will keep coming down. So in the current trend where the gold was going up, our LTV started falling. Okay. We are going to clarify you.
Unidentified Participant
Yeah, yeah, understood. Thank you. Thank you for the clarification.
operator
Thank you. The next question is from the line of Vikrant Pankaj Shah from Choice Institutional EQUITIES Please go ahead.
Unidentified Participant
Thank you for giving me opportunity. Could you share your perspective on the medium term capital trajectory as growth continues? As such an adequacy converges towards target levels. How should investors think about trade off between growth leverage and potential capital return?
Rajesh Sharma
We have adequate capital as I explained currently about 30% we adequate capital to support our growth for next two years. So till FY28 the EU whatever we intend to reach of 55,000 crore. Within that as I said 23% is off balance sheet item which is the cool ending. For that there is no capital allocation is required. So keeping that in mind we are we currently only have about 2.8 times leverage. We are quite comfortable to achieve our target AUM FY28 with the current capital.
Unidentified Participant
Okay, thank you.
operator
Thank you. The next question is from the line of Vikram Aditya Gajdar from Ventura Securities. Please go ahead.
Vikramaditya Gajbar
Hello. My question is given higher competition in secured MSME and lab are new loans coming at similar economics as before? If pricing is getting tighter, how are you compensating through underwriting discipline or risk controls?
Rajesh Sharma
So I think the biggest lever we are focusing as we said we are using technology platform across the way we onboard the customer, the way we process our loans, the way we do underwriting and later how do we do collection of the loan. The entire focus is how do we improve our productivity by continuously improving. And these technological grade initiative platform and AI agentic AI tools are making a sea change. If we can say that our wide number of branches have gone up significantly a year have been doubled. Our headcount have increased only by a marginal 19% of that.
So our focus is going to be become how you become operationally very very efficient by using all these tech and data science tools. So our focus is going to demand that same amount of disbursement we do with the less number of people with the less operating cost and our model becomes very very robust and that is driving our roe. In roe if you see quarter on quarter the improvement have been seen. Despite we continue to remain in growth rate. But while we continue to add on the branches the new capital has been added and still we are able to deliver the ROE of 4% and ROE about 15%.
Result of the focus on productivity efficiency using the technology and data science tools.
Vikramaditya Gajbar
Okay, thank you and all the best.
operator
Thank you. The next question is from the line of Sagar Shah from Spark Capital. Please go ahead.
Sagar Shah
Yes, thank you sir. Thankful for the opportunity and congratulations sir for such excellent set of numbers. My I majority of my questions Are answered. Actually, I just had one question we had. We have been affirmed by Crystal the rating of a one plus. And our cost average cost of borrowings are self calculated stands at 9.5%. And the lowering of cost of borrowings is one of the major things for us behind our ROE accretion. So you guided around few quarters before that. Our cost of borrowings is expected to come down once the rating is actually gets upgraded.
Rating gets upgraded. So any something like talks as a rating company so that it’s a big driver for us regarding our return ratios.
Rajesh Sharma
So I would like to say that cost of funds have already been reduced by 2524 basis on the back of strong performance. The internal rating model which banks follow they have reduced the rate of interest in the risk. Further, we are diversifying the borrowing by mixing the short term tool which are available. It is shorter tenor but lower cost like commercial paper and short term entity. So 24 basis is already achieved. And we expect on the back of good performance rating should happen now. Not that in advance it will happen, but we believe it is a.
It is a focus on continuous effort and better performance will yield to the rating upgrade. Whenever it happens that they decide and they let everyone know in the public domain also. But without that also by mix of borrowing and other measures we see that continuously will bring our cost of funds further down Whenever the credit setting happens. Maybe after annual result of when everybody will let you know. But there is a sharp focus on reducing the partial fund by another 2425 basis. So that whatever 50 basis we expected that we bring it down in next three to six months time.
Sagar Shah
Okay, so basically due to the RBI rate cuts and follow through from the banking system, you are estimating around 25 to 50 bits another one. But if the rating gets upgraded to more AA plus or anything like that, then what is the minimum expectation that the has of lowering the cost of borrowings? Because that will be in class with the top a nbsp that is. And that will be a big trigger for companies like K3 Global.
Rajesh Sharma
As we said, 24 basis is already achieved. Another 2425 basis we intend to achieve in next three to six months without accounting any rating upgrade. Whenever the rating upgrade happens, a gradual process that the lot of other avenues open up and then banks also take the measure. And that another it takes six to nine months to actually come in the PML. Because the rating reset of the existing borrowing happen at the reset date. New borrowing immediately start happening at the lower rate. So is a process which happen by In a draw gradual manner, not that moment rating upgrade happens, entire borrowing cost comes down.
But yes, in six to nine months the effect can be seen. So again, 24 basis already achieved. Another 20 to 25 basis will achieve another between three to six months time. And whenever the rating upgrade happens, that will happen. The cost advantage will accrue between six to nine months from there.
Sagar Shah
Okay. Okay. Thank you sir. And all the best. And first of all again congratulations for excellent set of numbers. Thank you.
operator
Thank you. The next question is from the line of Sinan Jada from HKP Securities. Please go ahead.
Ninad Jadhav
Yeah. Hello, good afternoon. So my question is on Macro lab. So you mentioned you’re targeting a portfolio. Of 3,000 crore in next two to three years. So if you could you know, share. Some color on customer demographics. Like what is the yield you’re targeting. And the average ticket size of the. Of the. Of the portfolio. And also what are the driving factors you are seeing that you will be. Able to achieve this target in next two or three years?
Rajesh Sharma
M icro LAP a verage ticket size is about 5 lakh. It is collateralized by security. The yield is in the range about 23 to 24%. And currently a yum is about 650 crore rupees. From the 51 branches in next three years time from now we intend to have a loan book about 3,000 crore.
Ninad Jadhav
Any ground situation you’re seeing, how is the customer behavior or you know, how is the repayment ability? So the factors that will help in achieving.
Rajesh Sharma
Currently our collection efficiency in the range of micro levels is 98% which is very very good. And we not like other micro lab lenders. We are using here technology and other tools to see that we are able to at the time of sourcing the customer, bad customers are rejected. There it is. So GNP at Microlab, GNPA at the end of third quarter is about 0.9% which is very very good. Our PL account for even the NP GNP happened in this range. Because we are making the yield about 23 24%. Even 2, 2.5% is reasonable. But since it’s a new portfolio and we are continuing to focus on our technological tool.
I think the way we are sourcing customer way we are underrating the customer. We are going to create the new benchmark in the industry in the micro lab.
operator
Thank you. The next question is from the line of Mokshan K. Sangji from BSC Advisors. Please go ahead.
Mokshanki Sanghvi
Hello. Hi everyone. Thank you for the opportunity. So I guess majority of my questions have been answered. My Specific query was on the designation of the CEO. So the person was appointed and appointed and resigned within a period of less than four months. And I just. And there were some rumors in the market as well. I just. If the management could provide a little more clarification than the sentence that was provided in the press release that he is pursuing the personal entrepreneurial journey it would be a little more better for us.
Rajesh Sharma
Yeah. Thank you. So yes, Mr. Munu was based through and throughout from Delhi. He was ablaze in ifl we hired him and before actually he get settled down. I think rather than coming to Bombay and shifting this base here he thought and reconsidered his decision in terms of that at this age juncture of his 52 age he would like to pursue some entrepreneurial opportunity and he has changed his mind and he has gone back to Delhi and he told us that he’s going to start something entrepreneurial in fintech space. Having said that, not that he has built some businesses and involved.
He just recently came and within a short span of time, less than a quarter he made up his mind. So neither he brought any certain number of team members along with him. So there is an impact of team coming, team going and I don’t think it has much impact. There is an adequate number of professionals in team in each vertical be it msme, be it gold, microlab, housing finance, car loans. There’s a separate risk head, there’s a group CRO. So all that is in place and it is not going to have any adverse impact as such.
Mokshanki Sanghvi
Understood. My specific issue was on the front that if there’s such a high level KMP is entering the company and leaving for the short span of time it might have a signal that there are some type of underlying issues or something. But I guess your answer addresses my side. Thank you.
operator
Thank you ladies and gentlemen. Due to time cutting that was the last question. I would now like to hand the conference over to the management for closing comments.
Rajesh Sharma
Yes, thank you. To conclude, we as you all know that we delivered a strong performance in Q3 FY26 with the LG AGM growth across our key lending segments supported by a diversified and predominantly secured portfolio. Profitability improved during the quarter driven by changing mix to high yield products, improving growing margins, strong growth in fee income and operating leverage from our existing branch network. While asset quality remains resilient. With a strong capital position and continued investment in technology and distribution, we are well positioned to scale efficiently and are confident of increasing our aum target to Rs.55,000 crore by FY28 and sustainable return on average equity of 16% to 18% and and return on average asset in the range about 4% to 4.25% by FY28.
Thank you.
operator
On behalf of Goindia Advisors. That concludes this conference. Thank you for joining us. And you may now disconnect your lines.