Capital First's Q4FY15 net profits up 22.28% y/y, Firstcall recommends 'Buy'

1. CMP 394.50
Target Price 450.00
ISIN: INE688I01017
MAY 16th
2015
CAPITAL FIRST LTD
Result Update (CONSOLIDATED): Q4 FY15
BUYBUYBUYBUY
Index Details
Stock Data
Sector Other Financial Services
BSE Code 532938
Face Value 10.00
52wk. High / Low (Rs.) 464.80/174.00
Volume (2wk. Avg. Q.) 41000
Market Cap (Rs. in mn.) 35892.40
Annual Estimated Results (A*: Actual / E*: Estimated)
YEARS FY15A FY16E FY17E
Net Sales 14394.58 16553.77 18540.22
EBITDA 9640.81 11566.58 12934.75
Net Profit 1142.81 1606.96 1852.13
EPS 12.56 17.66 20.36
P/E 31.41 22.34 19.38
Shareholding Pattern (%)
1 Year Comparative Graph
CAPITAL FIRST LTD BSE SENSEX
SYNOPSIS
Capital First Ltd. is a provider of financial service
across consumer and wholesale businesses, with
aspirations to grow into a significant financial
conglomerate.
In Q4 FY15, Net profit jumps to Rs. 364.73 mn an
increase of 22.28% against Rs. 298.28 mn in Q4
FY14.
The company’s net sales registered 33.83% increase
in Q4 FY15 and stood at a record Rs. 3850.42 mn
from Rs. 2877.19 mn in Q4 FY14.
During the quarter operating profit is Rs. 2503.96
mn as against Rs. 1980.01 mn in the corresponding
period of the previous year, an increase by 26.46%.
PBT at Rs. 468.08 mn in Q4 FY15 compared to Rs.
232.30 mn in Q4 FY14, registered a growth of
101.50%.
The company has reported an EPS of Rs. 4.01 for the
4th quarter as against an EPS of Rs. 3.61 in the
corresponding quarter of the previous year.
The company has recommended dividend of Rs.
2.20/- per equity share of Rs.10/- each.
CAPF has loan Asset Under Management of Rs.
119.75 bn as on March 31, 2015.
The Gross and Net NPA of the Company stood at
0.69% and 0.17% respectively as on March 31,
2015.
CAPF has a strong distribution setup across India
covering customer at 222 towns with an employee
base of 1070 as on March 31, 2015.
Net Sales and PAT of the company are expected to
grow at a CAGR of 23% and 31% over 2014 to
2017E respectively.
PEER GROUPS CMP MARKET CAP EPS P/E (X) P/BV(X) DIVIDEND
Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%)
Capital First Ltd 394.50 35892.40 12.56 31.41 2.28 22.00
Vls Finance Ltd 39.50 1527.10 1.43 27.62 0.75 0.00
Weizmann Forex Ltd 271.90 3144.30 16.27 16.71 3.86 75.00
Edelweiss Financial Services Ltd 63.90 50862.80 3.78 16.90 1.86 70.00

2. QUARTERLY HIGHLIGHTS (CONSOLIDATED)
Results updates- Q4 FY15,
Capital First Ltd. is a provider of financial service
across consumer and wholesale businesses, with
aspirations to grow into a significant financial
conglomerate has reported its financial results for
the quarter ended 31st March, 2015.
The company has achieved a turnover of Rs. 3850.42 million for the 4th quarter of the current year 2014-15 as
against Rs. 2877.19 million in the corresponding quarter of the previous year. EBITDA of Rs. 2503.96 million in
Q4 FY15, an increase of 26.46% against the corresponding period of last year. In Q4 FY15, net profit of Rs. 364.73
million against Rs. 298.28 million in the corresponding quarter of the previous year. The company has reported
an EPS of Rs. 4.01 for the 4th quarter as against an EPS of Rs. 3.61 in the corresponding quarter of the previous
year.
Break up of Expenditure
Rs. In million MAR-15 MAR-14 % Change
Net Sales 3850.42 2877.19 33.83
PAT 364.73 298.28 22.28
EPS 4.01 3.61 11.06
EBITDA 2503.96 1980.01 26.46
Break up of
Expenditure
(Rs. In millions)
Q4 FY15 Q4 FY14 % Change
Employee benefits
expenses
336.34 315.74 7%
Depreciation &
amortization expense
27.42 15.25 80%
Provision and write offs 318.08 62.47 409%
Amortized loan
origination cost
228.69 178.94 28%
Legal and Professional
charges
168.90 114.72 47%
Other expenses 295.27 237.27 24%

3. Latest Updates
• The company has recommended dividend of Rs. 2.20/- per equity share of Rs.10/- each (22%), to the equity
shareholders of the Company.
• The company has consistently increased its MSME and Retail financing from10% on March 31, 2010 to 84%
as on March 31, 2015.
• CAPF has loan Asset Under Management of Rs. 119.75 bn as on March 31, 2015.
• CAPF has a strong distribution setup across India covering customer at 222 towns with an employee base of
1070 as on March 31, 2015.
• The Capital Adequacy is 23.5% (Post Dividend) as on March 31, 2015. The Gross and Net NPA of the
Company stood at 0.69% and 0.17% respectively as on March 31, 2015.
COMPANY PROFILE
Capital First is a provider of financial service across consumer and wholesale businesses, with aspirations to
grow into a significant financial conglomerate. Capital First Ltd. is a Systemically important NBFC with record of
consistent growth & profitability. Capital First has a comprehensive product suite to meet multiple financial
needs of customers including Consumer Lending, Corporate Lending. Capital First is a Non-Banking Finance
Company listed on NSE and BSE, with a record of consistent growth & profitability.
Products
Loan Against Property
Two-Wheeler Loan
Durable Loan
Business Loan
Insurance
Corporate Loan

4. FINANCIAL HIGHLIGHT (CONSOLIDATED) (A*- Actual, E* -Estimations & Rs. In Millions)
Balance Sheet as at March 31, 2014 -2017E
FY14A FY15A FY16E FY17E
I. EQUITY AND LIABILITIES:
A. Shareholders’ Funds
a) Share Capital 820.22 909.82 909.82 909.82
b) Reserves and Surplus 10889.95 14827.84 16434.80 18286.93
Sub-Total-Net worth 11710.17 15737.66 17344.62 19196.75
B. Share application money pending allotment 8.36 0.00 0.00 0.00
C. Non-Current Liabilities:
a) Long-term borrowings 55700.92 47225.76 44392.21 41728.68
b) Other Long Term Liabilities 383.63 463.56 556.27 656.40
c) Long Term Provisions 952.58 968.04 1035.80 1087.59
Sub-Total-Long term liabilities 57037.13 48657.36 45984.29 43472.68
D. Current Liabilities:
a) Short-term borrowings 14664.46 13878.48 13462.13 12923.64
b) Trade Payables 1396.73 816.87 914.89 1006.38
c) Other Current Liabilities 16125.92 26846.90 36243.32 46029.01
d) Short Term Provisions 376.59 883.25 1042.24 1146.46
Sub-Total-Current Liabilities 32563.70 42425.50 51662.57 61105.49
TOTAL-EQUITY AND LIABILITIES (A+B+C+D) 101319.36 106820.52 114991.48 123774.92
II. ASSETS:
E. Non-Current Assets:
a) Fixed Assets 275.64 190.91 210.00 228.90
b) Goodwill on consolidation 64.49 0.00 0.00 85.00
c) Non Current Investments 11.07 0.00 0.00 0.00
d) Deferred tax assets 170.80 421.28 522.39 616.42
e) Long Term Loans and Advances 50085.19 66386.20 73024.82 79639.81
f) Other non-current assets 2517.64 2626.90 2784.51 2895.89
Sub-Total-Non-Current Assets 53124.83 69625.29 76541.72 83466.03
F. Current Assets:
a) Current Investment 3463.15 948.87 1062.73 1169.01
b) Trade Receivables 93.60 100.78 106.83 115.37
c) Cash and Bank Balances 20130.75 10570.58 10262.89 10776.03
d) Short Term Loans and Advances 23142.92 23939.41 25136.38 26141.84
e) Other Current Assets 1364.11 1635.59 1880.93 2106.64
Sub-Total-Current Assets 48194.53 37195.23 38449.76 40308.89
TOTAL-ASSETS (E+F) 101319.36 106820.52 114991.48 123774.92

5. Annual Profit & Loss Statement for the period of 2014 to 2017E
Value(Rs.in.mn) FY14A FY15A FY16E FY17E
Description 12m 12m 12m 12m
Net Sales 10674.07 14394.58 16553.77 18540.22
Other Income 31.12 71.15 78.27 84.53
Total Income 10705.19 14465.73 16632.03 18624.75
Expenditure -3582.34 -4824.92 -5065.45 -5689.99
Operating Profit 7122.85 9640.81 11566.58 12934.75
Interest -6468.25 -7878.07 -9138.56 -10143.80
Gross profit 654.60 1762.74 2428.02 2790.95
Depreciation -64.32 -99.57 -112.51 -126.02
Profit Before Tax 590.28 1663.17 2315.50 2664.93
Tax -63.99 -520.36 -708.54 -812.80
Net Profit 526.29 1142.81 1606.96 1852.13
Equity capital 826.32 909.82 909.82 909.82
Reserves 10889.95 14827.84 16434.80 18286.93
Face value 10.00 10.00 10.00 10.00
EPS 6.37 12.56 17.66 20.36
Quarterly Profit & Loss Statement for the period of 30th Sep, 2014 to 30th June, 2015E
Value(Rs.in.mn) 30-Sep-14 31-Dec-14 31-Mar-15 30-Jun-15E
Description 3m 3m 3m 3m
Net sales 3475.82 3798.35 3850.42 4158.45
Other income 0.55 3.09 0.81 0.91
Total Income 3476.37 3801.44 3851.23 4159.36
Expenditure -1107.82 -1276.75 -1347.27 -1434.67
Operating profit 2368.55 2524.69 2503.96 2724.69
Interest -1927.99 -2046.42 -2008.46 -2128.97
Gross profit 440.56 478.27 495.50 595.73
Depreciation -23.58 -24.70 -27.42 -29.61
Profit Before Tax 416.98 453.57 468.08 566.11
Tax -146.48 -154.44 -103.35 -176.63
Net Profit 270.50 299.13 364.73 389.49
Equity capital 830.07 831.31 909.82 909.82
Face value 10.00 10.00 10.00 10.00
EPS 3.26 3.60 4.01 4.28

6. Ratio Analysis
Particulars FY14A FY15A FY16E FY17E
EPS (Rs.) 6.37 12.56 17.66 20.36
EBITDA Margin (%) 66.73 66.98 69.87 69.77
PBT Margin (%) 5.53 11.55 13.99 14.37
PAT Margin (%) 4.93 7.94 9.71 9.99
P/E Ratio (x) 61.94 31.41 22.34 19.38
ROE (%) 4.49 7.26 9.26 9.65
ROCE (%) 8.76 12.68 15.53 17.69
Debt Equity Ratio 6.01 3.88 3.34 2.85
EV/EBITDA (x) 11.14 8.87 7.13 6.08
Book Value (Rs.) 141.79 172.98 190.64 211.00
P/BV 2.78 2.28 2.07 1.87
Charts

7. OUTLOOK AND CONCLUSION
At the current market price of Rs. 394.50, the stock P/E ratio is at 22.34 x FY16E and 19.38 x FY17E
respectively.
Earning per share (EPS) of the company for the earnings for FY16E and FY17E is seen at Rs.17.66 and
Rs.20.36 respectively.
Net Sales and PAT of the company are expected to grow at a CAGR of 23% and 31% over 2014 to 2017E
respectively.
On the basis of EV/EBITDA, the stock trades at 7.13 x for FY16E and 6.08 x for FY17E.
Price to Book Value of the stock is expected to be at 2.07 x and 1.87 x for FY16E and FY17E respectively.
We expect that the company surplus scenario is likely to continue for the next three years, will keep its
growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of
Rs.450.00 for Medium to Long term investment.
INDUSTRY OVERVIEW
India has a diversified financial sector, which is undergoing rapid expansion. The sector comprises commercial
banks, insurance companies, non-banking financial companies, co-operatives, pension funds, mutual funds and
other smaller financial entities. The financial sector in India is predominantly a banking sector with commercial
banks accounting for more than 60 per cent of the total assets held by the financial system. India's services sector
has always served the country’s economy well, accounting for about 57 per cent of the gross domestic product
(GDP). In this regard, the financial services sector has been an important contributor.
The Government of India has introduced reforms to liberalise, regulate and enhance this industry. At present,
India is undoubtedly one of the world's most vibrant capital markets. Challenges remain, but the future of the
sector looks good. The advent of technology has also aided the growth of the industry. About 75 per cent of the
insurance policies sold by 2020 would, in one way or another, be influenced by digital channels during the pre-
purchase, purchase or renewal stages, as per a report by Boston Consulting Group (BCG) and Google India.
India’s gross domestic savings (GDS) as a percentage of gross domestic product (GDP) has mostly remained
above 30 per cent since 2004 and stood at 32.7 per cent in FY13. It is expected that the domestic savings in India
will reach US$ 1,272 billion by 2019 from US$ 683 billion in 2013. The financial services sector consists of the
capital markets, insurance sector and non-banking financial companies (NBFCs). The asset management industry
in India is among the fastest growing in the world. Total asset under management (AUM) of the mutual fund
industry clocked a compound annual growth rate (CAGR) of 15.9 per cent over FY07-14 to reach US$ 150 billion.

8. Outlook
India is today one of the most vibrant global economies, on the back of robust banking and insurance sectors. The
country is projected to become the fifth largest banking sector globally by 2020, as per a joint report by KPMG-
CII. The report also expects bank credit to grow at a compound annual growth rate (CAGR) of 17 per cent in the
medium term leading to better credit penetration. Life Insurance Council, the industry body of life insurers in the
country also projects a CAGR of 12–15 per cent over the next few years for the financial services segment.
There is a lot of scope for growth in the financial services sector with the total wealth holdings by High Net
Worth Individuals (HNWI) in India, which is estimated at US$ 584.5 billion, projected to reach US$ 3 trillion by
2020. Also, there is potential in the rural credit sector which can be tapped by ensuring timely loans that are
critical to the agricultural industry.
Disclaimer:
This document is prepared by our research analysts and it does not constitute an offer or solicitation for the
purchase or sale of any financial instrument or as an official confirmation of any transaction. The information
contained herein is from publicly available data or other sources believed to be reliable but we do not represent that
it is accurate or complete and it should not be relied on as such. Firstcall Research or any of its affiliates shall not be
in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the
information contained in this report. Firstcall Research and/ or its affiliates and/or employees will not be liable for
the recipients’ investment decision based on this document.

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