Capital First Q3 net profit up by 42% on Y-o-Y basis; revenue rises 49%

Capital First’s Net profit increased on an annual basis by 42 per cent to Rs 870 million for the quarter ended-December 2017, as against Rs 613.5 million in the same period of the year 2016. Net Profits rose by 11 per cent on a sequential basis from Rs 782.7 million at the end September 2017.

The debt financing non-banking finance company had announced a merger deal with IDFC Bank on January 13, through which Capital First Limited along with its Home Finance and Securities companies would be amalgamated with IDFC Bank.

V Vaidyanathan, founder and chairman of Capital First told the Business Standard, "the Indian consumption sector is coming back quite strongly, you can see it in the sales of cars, homes, two-wheelers, across FMCG (fast moving consumer goods) products in India. This whole sector has started growing again, so financing also gets a natural lift-off "

Total Income has risen by 49 per cent from Rs 4.27 billion in Q3 FY2017 to Rs 6.39 billion in Q3 FY18, while the company’s financing costs rose 15 per cent from Rs 3.08 billion in Q3 FY2017 to Rs 3.56 million in Q3 FY2018.

Net Interest Income grew by 58 per cent, from Rs 3.33 billion in Q3 FY2017 to Rs 5.26 billion in Q3 FY2018.

Assets Under Management (AUM) grew by 32 per cent to Rs 247.55 billion at the end of December 31, 2017 from Rs 229.74 billion in Q2 FY2018— 93 per cent of the AUMs comprise retail assets. The loan book increased to Rs 206.08 billion as on December 31, 2017, from Rs 150.9 billion as on March 31, 2017, which is a 36 per cent increase.

"We are already beginning to see that after demonetisation, that the extent of business reflected on the official books of accounts of customers have substantially increased. In fact lending has become easier, and we expect this trend to continue," says Vaidyanathan who is poised lead the IDFC-Capital First merged company as chief managing director,

Earnings per Share (Basic) have risen considerably since the third quarter of FY2017, from Rs 6.57 to Rs 8.81 for the third quarter ending FY2018.

Gross Non-Performing Assets (NPA) has reduced to 1.59 per cent and the Net NPA has reduced to 0.97 per cent at the end of Q3 FY2018, from 1.63 per cent and 1 per cent as at end Q2 FY2018, respectively.

When asked about how the small to medium business space were performing, Vaidyanathan said: "In the commercial space, our target segment is customers whose turnover which are not very big, whose profits are also not very big either. We find that in this business (segment), the demand is very strong." 

Return on Equity (RoE) has increased from 13.06 per cent in Q2 FY2017 to 14.08 per cent in Q3 FY2018. The RoE increased by 40.5 per cent from 10.02 per cent in Q2 FY2016.

The merger deal with IDFC Bank scheme is presently yet to receipt approval from various regulatory institutions like the Reserve Bank of India, Competition Commission of India, the stock exchanges, the Securities and Exchange Board of India, the National Company Law Tribunal, the National Housing Bank and, most importantly the respect shareholders and creditors of both financial companies.

The merged entity will have assets worth Rs 880 billion under management, a branch network of 194, and a customer base of over 5 million. IDFC Bank will issue 139 shares for every 10 shares of Capital First, according to the agreement outlined so far.

"We expect this merger to be a relatively smooth transaction, because these are very complementary businesses. For the next the six to nine months, till the merger process goes through, it is literally just business as usual. We are in a large market, we have good traction on lending, our NPA levels are very low, so we will keep growing." says Vaidyanathan.  

The combined entity will have a Net Profit of Rs 12.68 billion (based on FY2017), 353 dedicated banking correspondence outlets, and over 9,100 micro automated teller machine points.

Capital First closed at 771.1 points on Wednesday, 0.94 per cent lower than its opening price on the BSE, after hitting a high of 792.45 points during the day. Market capitalization of the company stands at Rs 76.32 billion.