Courtesy: https://www.chittorgarh.com/
Review By Dilip Davda on June 24, 2025
- The company is engaged in lending MSMEs and underserved masses in Tier-3-5 towns.
• It has posted erratic financial performances for the last three fiscals.
• The counter is currently trading around Rs.78, i.e., below the RI pricing.
• The company is operating in a highly competitive and fragmented segment.
• There is no harm in skipping this “High Risk/No Return” pricey bet.
ABOUT COMPANY:
Capital Trust Ltd. (CTL) is a publicly listed non-banking finance company (NBFC) that specializes in providing income generating digital business loans in tier 3-5 towns. Merging best practices of fintech and traditional financing, the company focuses on financial inclusion of the underserved in deep interiors of rural India. It does so by using digital processes without compromising on its “feet-on-street” model. As on March 31, 2025, Capital Trust has an Asset under Management of Rs. 19100 Lakhs and caters to over 80000 customers in 11 states in North and East India. CTL’s commitment to financial inclusion through its unique blend of digital processes and its established “feet- on-street” model has resulted in serving an even wider customer base.
As an NBFC, registered with RBI, it is subject to regulations relating to the capital adequacy, which determine the minimum amount of capital it must hold as a percentage of the risk-weighted assets on portfolio and of the risk adjusted value of off-balance sheet items, as applicable. As per the capital adequacy norms issued by the RBI, it is required to have a regulatory minimum CRAR of 15% consisting of Tier 1 and Tier II capital. CTL’s CRAR as of March 31, 2024 and March 31, 2025 was 28.82% and 29.45%, respectively, of which Tier 1 was 28.51 % and 29.22% and Tier 2 was 0.32 % and 0.23 %, respectively. The Company proposes to utilize the Net Proceeds towards augmenting its capital base to meet future capital requirements.
Launched in FY 2019, the Capital Business Loan (CBL) continues to be the driving force behind Capital Trust Ltd.’s mission. Leveraging its ever-expanding 16 years of experience in rural India, CBL remains the core product empowering informal MSMEs with short-term business loans and rapid turnaround times. The commitment to a 100% digital assisted disbursement process fosters financial inclusion, and it has seen a continued increase in customers adopting online as their preferred repayment method. For those requiring non-digital support, its robust network of field staff ensures efficient collection.
CBL is a unique MSME lending product that has been developed by the company using its 12- year experience with dealing with clients in rural India. It provides clients access to a short tenure business loan with quick turnaround time. Already having 100% digital disbursement, through this product, the company has been able to push clients to have digital repayment (NACH) as first mode of repayment. Non digitally cleared cases are then met for collection through cash mode by the 2000+ member field staff. The company has also launched secured loans up to 10 lakhs as secured business loan. As of March 31, 2025, it had 1470 employees on its payroll.
ISSUE DETAILS:
The company is coming out with its Rights Issue (RI) of 6074893 equity shares of Rs. 10 each at a fixed price of Rs. 82 per share to mobilize Rs. 49.81 cr. The RI is opening for subscription on June 25, 2025, and will close on July 12, 2025. The company is offering RI in the ratio of 5 for 14 to its eligible stakeholders as of the record date of June 18, 2025. The company is asking for full money on application for number of shares applied. Post allotment, shares will be listed on BSE and NSE. The company is spending Rs. 0.25 cr. for this RI process, and from the net proceeds, it will utilize Rs. 45.00 cr. for augmenting its capital base, and Rs. 4.56 cr. for general corporate purposes.
The RI is self-managed by the company itself, and MAS Services Ltd. is the registrar to the issue.
Post RI, company’s current paid-up equity capital of Rs. 17.01 cr. will stand enhanced to Rs. 23.08 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 189.29 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last XXX fiscals, it has posted a total revenue/ net profit/ – (loss), of Rs. Rs. 86.91 cr. / Rs. – (45.50) cr. (FY23), Rs. 79.58 cr. / Rs. 2.16 cr. (FY24), Rs. 96.00 cr. / Rs. 1.11 cr. (FY25). Thus, after suffering a loss of Rs. 45+ cr. for FY23, it posted minuscule profits for the following two fiscals. Surge n paid-up equity may face its servicing issue in light of lower profits.
DIVIDEND POLICY:
The offer document is silent on its dividend policy. The company has not declared any dividends for the reported periods of the offer document. It will adopt a prudent dividend policy post listings of RI shares based on its financial performance and future prospects.
SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 511505 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 91.93 on June 17, 2025, and opened on an ex-right basis at 85.65 on June 18, 2025. Since then, it has marked a high/low of Rs. 89.59 / Rs. 76.63. The scrip last closed at Rs. 79.16 as of June 23, 2025. For the last 52 weeks’ it has posted a high/low of Rs. 178.90 / Rs. 66.07.
The promoters’ holding has been constant around 64.6+% for the last three quarters ended with March 31, 2025. The counter is currently trading below the RI price making it a pure avoid case.
Conclusion / Investment Strategy
CTL is engaged in lending MSMEs and under-served masses in Tier-3-5 towns. It has posted erratic financial performances for the last three fiscals. The counter is currently trading around Rs.78, i.e., below the RI pricing. The company is operating in a highly competitive and fragmented segment. There is no harm in skipping this “High Risk/No Return” pricey bet.
Review By Dilip Davda on June 24, 2025
Review Author
DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. My reviews do not cover GMP market and operators game plans. Readers must consult a qualified financial advisor before making any actual investment decisions, based the on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the recent past, SME IPOs drew the attention of investors across the board and lead to seer madness. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at their own risk. The above information is based on information available as of date coupled with market perceptions. The Author has no plans to invest in this offer.
About Dilip Davda
Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.
Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detailed fundamental and financial analysis of companies coming up with IPOs helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.
(Dilip Davda -SEBI registered Research Analyst-Mumbai,
Registration no. INH000003127 (Perpetual)
Email id: dilip_davda@rediffmail.com ).
Courtesy: https://www.chittorgarh.com/
