Choice Institutional Equities Upgrades CGCL to Buy, Targets Rs 250

CGCL Sees Strong AUM Growth in Q4FY26, Drives Rating Upgrade to 'BUY'

Choice Institutional Equities has released a report on CGCL, highlighting the company's robust performance in the fourth quarter of fiscal year 2026. CGCL's Assets Under Management (AUM) witnessed significant growth across its Gold, Housing and Construction Finance segments, contributing to the company's overall financial success.

The total AUM of CGCL grew by a substantial 60.2% year-over-year (YoY) and 20.4% quarter-over-quarter (QoQ). Specifically, the Gold Loans AUM experienced a remarkable growth of 110.9% YoY and 32.5% QoQ, reaching INR 169.6 billion. The Housing Finance segment also saw a notable increase of 43.2% YoY and 14.7% QoQ, reaching INR 74.5 billion, while the Construction Finance segment grew by 38.1% YoY and 11.7% QoQ, reaching INR 57.1 billion.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

The strong AUM growth has led to a significant increase in CGCL's Net Interest Income (NII), which in turn has been driven by a higher Net Interest Margin (NIM) and a decline in Cost of Funds (CoF). As a result, Choice Institutional Equities has revised its FY27E/FY28E Profit After Tax (PAT) estimate by 22.5%/9.2%, respectively.

Looking ahead, the company is expected to see a further reduction of 10-20 basis points in CoF in FY27E. Based on this outlook, Choice Institutional Equities has valued CGCL using the residual income approach at INR 250.0 and upgraded its rating on the stock to 'BUY'. The target price indicates a Price to Adjusted Book Value of 2.8x/2.3x for FY27E/FY28E, respectively.