CGCL - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:15 pm

Fundamental Rating: 3.7

📊 Core Financials

• Quarterly PAT improved from 150 Cr. to 212 Cr. (+145%), showing strong earnings momentum.
• ROE at 11.0% and ROCE at 11.4% indicate moderate profitability and efficiency.
• Debt-to-equity ratio of 1.99 highlights relatively high leverage, typical for NBFCs but a risk factor.
• Dividend yield at 0.11% is minimal, reflecting reinvestment focus.

💹 Valuation Indicators

• P/E Ratio: 27.6 vs Industry PE of 21.2 → Slightly overvalued compared to peers.
• P/B Ratio: Current Price / Book Value ≈ 2.75 → Fairly priced relative to assets.
• PEG Ratio: 0.75 → Suggests attractive growth potential at current valuation.
• Intrinsic Value Zone: ₹160–₹170 (near DMA 200 and RSI oversold zone).

🏭 Business Model & Competitive Advantage

• Core operations in housing finance and affordable credit solutions.
• Strong presence in retail lending with focus on underserved markets.
• Competitive advantage lies in niche positioning and growing demand for affordable housing finance.

📈 Entry Zone & Long-Term Guidance

• Entry Zone: Attractive accumulation between ₹160–₹170.
• Long-Term Holding: Suitable for investors seeking exposure to housing finance growth, but leverage risk must be considered.

✅ Positive

• Strong quarterly PAT growth (+145%).
• Moderate ROE (11.0%) and ROCE (11.4%).
• PEG ratio of 0.75 indicates favorable growth potential.
• Increase in FII holdings (+0.11%).

⚠️ Limitation

• High debt-to-equity ratio (1.99).
• Dividend yield at 0.11% is negligible.
• P/E ratio (27.6) slightly above industry average.
• Stock trading at mid-range of 52-week index (36.3%).

📉 Company Negative News

• Decline in DII holdings (-0.24%).
• High leverage raises financial risk concerns.

📈 Company Positive News

• Quarterly PAT improved to 212 Cr. from 150 Cr.
• EPS at ₹6.99 indicates stable earnings base.
• Increase in foreign institutional investor confidence (+0.11%).

🌐 Industry

• Housing finance and NBFC sector driven by government initiatives and rising urban demand.
• Industry PE at 21.2 indicates moderate valuation compared to CGCL’s premium.
• Sector outlook supported by mortgage growth and affordable housing demand in India.

🔎 Conclusion

• CGCL shows strong earnings growth and favorable PEG ratio but remains slightly overvalued.
• High leverage is a key risk factor, though typical for NBFCs.
• Accumulation recommended near ₹160–₹170 for favorable long-term exposure to housing finance growth.