Capital Trust's Q4FY15 net profits up 354.41% y/y, Firstcall recommends 'buy'

1. CMP 234.00
Target Price 269.00
ISIN: INE707C01018
JUNE 4th
2015
CAPITAL TRUST LIMITED
Result Update (PARENT BASIS): Q4 FY15
BUYBUYBUYBUY
Index Details
Stock Data
Sector Finance
BSE Code 511505
Face Value 10.00
52wk. High / Low (Rs.) 269.30/20.80
Volume (2wk. Avg. Q.) 13000
Market Cap (Rs. in mn.) 1755.00
Annual Estimated Results (A*: Actual / E*: Estimated)
YEARS FY15A FY16E FY17E
Net Sales 400.92 500.35 598.42
EBITDA 288.55 364.25 438.04
Net Profit 96.47 129.64 165.63
EPS 12.86 17.29 22.08
P/E 18.19 13.54 10.60
Shareholding Pattern (%)
1 Year Comparative Graph
CAPITAL TRUST LTD BSE SENSEX
SYNOPSIS
Capital Trust is a Non Banking Finance Company
(non-deposit taking) provides micro loans
predominantly in rural and semi urban areas.
In Q4 FY15, Net profit jumps to Rs. 28.31 million
an increase of 354.41% against Rs. 6.23 million in
the corresponding quarter of previous year.
The company’s net sales registered 81.86%
increase and stood at a record Rs. 117.28 million
from Rs. 64.49 million over the corresponding
quarter of previous year.
In Q4 FY15, Operating profit is Rs. 83.73 million,
an increase of 97.52% as against Rs. 42.39 million
in the corresponding period of the previous year.
Profit before tax (PBT) at Rs. 44.22 million in Q4
FY15 compared to Rs. 14.27 million in Q4 FY14,
registered a growth of 209.88%.
The company has reported an EPS of Rs. 3.77 for
the 4th quarter as against an EPS of Rs. 0.83 in the
corresponding quarter of the previous year.
Capital Trust Ltd has recommended Dividend of
Rs. 1.00/- Per Share (10%) for the year ended
March 31, 2015.
Net Sales and PAT of the company are expected to
grow at a CAGR of 60% and 81% 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 Trust Ltd 234.00 1755.00 12.86 18.19 9.25 10.00
Wall Street Finance Ltd 26.70 309.00 1.31 20.38 1.88 0.00
Power Finance Corporation Ltd 256.45 338524.40 45.14 5.68 1.02 91.00
Shriram City Union Finance Ltd 1640.65 108129.80 84.68 19.37 3.12 150.00

2. QUARTERLY HIGHLIGHTS (PARENT BASIS)
Results updates- Q4 FY15,
Capital Trust is a Non Banking Finance Company (non-
deposit taking) provides micro loans predominantly in
rural and semi urban areas has reported its financial
results for the quarter ended 31st March, 2015.
The company has achieved a turnover of Rs. 117.28 million for the 4th quarter of the financial year 2015 as
against Rs. 64.49 million in the corresponding quarter of the previous year. EBITDA of Rs. 83.73 million in Q4
FY15, an increase of 97.52% against the corresponding period of last year. In Q4 FY15, net profit of Rs. 28.31
million against Rs. 6.23 million in the corresponding quarter of the previous year. The company has reported an
EPS of Rs. 3.77 for the 4th quarter as against an EPS of Rs. 0.83 in the corresponding quarter of the previous year.
Break up of Expenditure
Rs. In million Mar-15 Mar-14 % Change
Net Sales 117.28 64.49 81.86
PAT 28.31 6.23 354.41
EPS 3.77 0.83 354.41
EBITDA 83.73 42.39 97.52
Particulars
Rs. Million
Q4 FY15 Q4 FY14 % Chng
Employee Cost 22.48 11.30 99%
Premises Cost 3.33 1.72 94%
Travelling & Conveyance 5.73 1.92 198%
Loan Loss W/Off 0.74 1.10 -33%
Other expenditure 6.18 4.86 27%
Depreciation -0.30 0.20 -250%

3. COMPANY PROFILE
Capital Trust is a Non-Banking Finance Company (non-deposit taking) listed on the Bombay Stock Exchange. The
company has 30 years of operating history, promoted by prominent ex-bankers, which included the then recently
retired Governor RBI, Mr K.R. Puri. Other promoters also included the then retired Chief Justice of India.
The company provides micro and small loans predominantly in rural and semi urban areas. Most loans are to
those which are not financially included in the banking sector. Maximum loan size is Rs. 5 Lakhs. The company
provides Enterprise loans for Agriculture, Dairy and Livestock, Trading, Retail activities, Services, Food related
business, etc. Capital Trust also provide home improvement loans and loans against property. The company is
also a business correspondent of YES Bank and provides loans under microfinance and Self Help Group schemes.
The company is currently operating in 4 States in north India covering 27 Districts through 83 branches. Capital
Trust has also applied to the Reserve Bank of India for small finance bank licence.
Products
• Microfinance
• Enterprise loan
• Home loans

4. FINANCIAL HIGHLIGHT (PARENT BASIS) (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 105.00 105.00 105.00 105.00
b) Reserves and Surplus 33.95 114.70 216.09 356.56
Sub-Total-Net worth 138.95 219.70 321.09 461.56
B. Non-Current Liabilities:
a) Long-term borrowings 1.69 58.19 52.37 48.18
b) Other Non-Current Liabilities 2.70 3.44 3.96 4.43
Sub-Total-Long term liabilities 4.39 61.63 56.33 52.61
C. Current Liabilities:
a) Short-term borrowings 519.51 712.50 876.38 1007.83
b) Trade Payables 8.41 15.08 19.60 22.54
c) Other Current Liabilities 10.48 183.17 272.92 349.34
d) Long Term Provisions 13.68 46.72 64.01 78.73
Sub-Total-Current Liabilities 552.08 957.47 1232.91 1458.45
TOTAL-EQUITY AND LIABILITIES (A+B+C) 695.42 1238.80 1610.33 1972.61
II. ASSETS:
D. Non-Current Assets:
a) Tangible Assets 6.10 8.67 10.84 12.79
b) Deferred tax assets 2.34 2.96 3.61 4.33
c) Long-term loans and advances 0.00 224.08 302.51 375.11
Sub-Total-Non-Current Assets 8.44 235.71 316.96 392.23
E. Current Assets:
a) Trade Receivables 7.82 28.68 43.59 59.29
b) Cash and Bank Balances 23.79 269.31 495.32 721.37
c) Short Term Loans and Advances 655.37 705.10 754.46 799.72
Sub-Total-Current Assets 686.98 1003.09 1293.37 1580.38
TOTAL-ASSETS (D+E) 695.42 1238.80 1610.33 1972.61

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 179.61 400.92 500.35 598.42
Other Income 0.00 0.00 0.00 0.00
Total Income 179.61 400.92 500.35 598.42
Expenditure -81.52 -112.37 -136.09 -160.38
Operating Profit 98.09 288.55 364.25 438.04
Interest -67.88 -141.47 -165.52 -185.38
Gross profit 30.21 147.08 198.73 252.66
Depreciation -0.74 -1.15 -1.41 -1.70
Profit Before Tax 29.47 145.93 197.32 250.96
Tax -11.23 -49.46 -67.68 -85.33
Net Profit 18.24 96.47 129.64 165.63
Equity capital 75.00 75.00 75.00 75.00
Reserves 33.95 114.70 216.09 356.56
Face value 10.00 10.00 10.00 10.00
EPS 2.43 12.86 17.29 22.08
Quarterly Profit & Loss Statement for the period of 30th Sep, 2014 to 30th Jun, 2015E
Value(Rs.in.mn) 30-Sep-14 31-Dec-14 31-Mar-15 30-Jun-15E
Description 3m 3m 3m 3m
Net sales 99.47 103.19 117.28 144.25
Other income 0.00 0.00 0.00 0.00
Total Income 99.47 103.19 117.28 144.25
Expenditure -26.23 -28.19 -33.55 -37.79
Operating profit 73.24 75.00 83.73 106.46
Interest -33.92 -35.00 -39.81 -46.34
Gross profit 39.32 40.00 43.92 62.20
Depreciation -0.68 -0.48 0.30 -0.10
Profit Before Tax 38.64 39.52 44.22 60.02
Tax -13.81 -12.13 -15.91 -20.99
Net Profit 24.83 27.39 28.31 39.74
Equity capital 75.00 75.00 75.00 75.00
Face value 10.00 10.00 10.00 10.00
EPS 3.31 3.65 3.77 5.30

6. Ratio Analysis
Particulars FY14A FY15A FY16E FY17E
EPS (Rs.) 2.43 12.86 17.29 22.08
EBITDA Margin (%) 54.61 71.97 72.80 73.20
PBT Margin (%) 16.41 36.40 39.44 41.94
PAT Margin (%) 10.16 24.06 25.91 27.68
P/E Ratio (x) 96.22 18.19 13.54 10.60
ROE (%) 16.74 50.85 44.53 38.38
ROCE (%) 15.68 30.16 29.98 29.56
Debt Equity Ratio 4.78 4.06 3.19 2.45
EV/EBITDA (x) 22.96 7.82 6.01 4.77
Book Value (Rs.) 14.53 25.29 38.81 57.54
P/BV 16.11 9.25 6.03 4.07
Charts

7. OUTLOOK AND CONCLUSION
At the current market price of Rs. 234.00, the stock P/E ratio is at 13.54 x FY16E and 10.60 x FY17E
respectively.
Earning per share (EPS) of the company for the earnings for FY16E and FY17E is seen at Rs.17.29 and
Rs.22.08 respectively.
Net Sales and PAT of the company are expected to grow at a CAGR of 60% and 81% over 2014 to 2017E
respectively.
On the basis of EV/EBITDA, the stock trades at 6.01 x for FY16E and 4.77 x for FY17E.
Price to Book Value of the stock is expected to be at 6.03 x and 4.07 x respectively for FY16E and FY17E.
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.269.00 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.

8. 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. The
size of banking assets in India reached US$ 1.8 trillion in FY14 and is expected to touch US$ 28.5 trillion by FY25.
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.
Also, the relaxation of foreign investment rules has received a positive response from the insurance sector, with
many companies announcing plans to increase their stakes in joint ventures with Indian companies. Over the
coming quarters there could be a series of joint venture deals between global insurance giants and local players.
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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