Capital Trust Limited (CTL) has been downgraded by CARE Ratings from BB+ to BB with a Stable outlook. The rating revision for bank facilities considers a weakening profitability due to a substantial increase in credit costs, significant deterioration in asset quality, a weakening capitalization profile, and a consistently declining scale of operations. As of September 30, 2025, CTL's tangible net worth (TNW) had declined to ₹2 crore with a capital adequacy ratio (CAR) of 10%, against minimum regulatory requirements of ₹10 crore and 15%, respectively. However, the company subsequently raised capital of ₹24 crore, providing adequate cushion. CTL has also ventured into the secured lending segment with a gold loan product. In H1FY26, the company reported a net loss of ₹26 crore compared to a profit of ₹1 crore in FY25. Credit costs surged to 25.72% in H1FY26 from 1.43% in FY25. Gross NPA ratio deteriorated to 9.4% in September 2025 from 5.9% in FY25 and 1.4% in FY24. The company's Assets Under Management (AUM) stood at ₹124 crore as of September 30, 2025, a decline from previous periods. To address the depletion in net worth, CTL raised ₹23.8 crore in November 2025 through a rights issue. Following this, the TNW stood at ₹26 crore and CAR improved to 35.7%. CARE Ratings has also withdrawn the rating on the non-convertible debenture (NCD) as the bond has been repaid in full. The rating rationale highlights weak profitability, significantly deteriorated asset quality, and a declining scale of operations as key weaknesses. Key strengths include a diversified resource profile with relationships with 15 lenders and geographically diversified operations across 10 states.