R.R. Kabel Sees Bullish Outlook, Target Price Set at Rs 250: Choice Institutional Equities

CGCL Sees Strong Q4FY26 Performance Driven by AUM Growth

Choice Institutional Equities has released a report highlighting the impressive performance of CGCL in the fourth quarter of fiscal year 2026. The company's Assets Under Management (AUM) grew significantly across its key segments, including Gold Loans, Housing Finance, and Construction Finance.

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

CGCL's Strong Performance to Drive Future Growth

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The research firm has revised its estimates for CGCL's Profit After Tax (PAT) for fiscal years 2027 and 2028, with an increase of 22.5% and 9.2%, respectively. This revision is attributed to stronger Net Interest Income (NII) growth, which is expected to be driven by higher AUM and an increase in Net Interest Margin (NIM). The reduction in Cost of Funds (CoF) is also expected to contribute to this growth.

Outlook and Valuation

Looking ahead, Choice Institutional Equities anticipates a further reduction of 10-20 basis points in CoF for fiscal year 2027. The firm values CGCL using the residual income approach and has upgraded its rating on the stock to 'BUY'. The target price indicates a Price to Adjusted Book Value of 2.8x for fiscal year 2027 and 2.3x for fiscal year 2028.

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