CreditAccess Grameen Ltd. share price target

CreditAccess Grameen’s (CREDAG) 4QFY25 PAT stood at INR472m (est. INR698m). FY25 PAT declined ~63% YoY to INR5.3b. 4Q NII was flat YoY at ~INR8.8b (in line). PPOP declined ~7% YoY to INR6.3b (~7% miss).

CreditAccess Grameen Limited (CREDAG), in its interim business update, reported a healthy recovery in its loan portfolio growth, with its Gross Loan Portfolio (GLP) increasing by 2.36%, reaching INR 253,950 Mn in February 2025, compared to INR 248,100 Mn in December 2024.
The expansion was driven by borrower additions of over 0.15 Mn onboarded in January and February 2025.

Net Interest Income (NII) grew by 7.4% YoY but declined by 7.6% QoQ to INR 8,617 Mn, missing our estimates due to a contraction in the AUM. The Net Interest Margin (NIM) for the quarter dropped to 12.5%, compared to 13.0% in Q2FY25 and 13.1% in Q3FY24.

We revise our rating from BUY to HOLD.

CreditAccess Grameen (CREDAG)’s 3QFY25 loss stood at INR995m (vs. MOFSLe PAT of INR1.3b). NII grew ~7% YoY to ~INR8.6b (~6% miss) and PPoP rose 4% YoY to ~INR6.2b (~6% miss). Cost-income ratio was stable at ~31% (PY: ~30% and PQ: ~31%).

Stress in MFI intensifies pressure on credit growth and asset quality

Net Interest Income (NII) for Q2FY25 increased by 20.8% YoY (-2.1% QoQ) to INR 9,324 Mn. The Pre-Provisioning Operating Profits (PPOP) grew by 19.5% YoY (-5.2% QoQ) to INR 6,721 Mn in Q2FY25, led by growth in NII.

We maintain our BUY recommendation on the stock.

CreditAccess Grameen (CREDAG)’s 2QFY25 PAT declined ~46% YoY to ~INR1.86b (~29% miss). 1HFY25 PAT declined ~16% YoY to ~INR5.8b, and we expect 2HFY25 PAT to decline ~38% YoY.

Net Interest Income (NII) for Q1FY25 increased by 24.8% YoY (+3.3% QoQ) to INR 9,526 Mn. NII was higher by 2.0% than our estimates, led by higher-than-expected interest income.

We maintain our BUY recommendation on the stock.

Maintains guidance despite asset quality pressures

CA Grameen’s business resiliency reflects in only 50bps drop in collections to 97.8% during Q1FY25 vs 98.3% in Q4FY25 and best-in-class return ratios with RoA at >5% and RoE at >20% for the sixth consecutive quarter.

Net Interest Income (NII) for Q4FY24 increased by 33.6% YoY (+14.9% QoQ) to INR 9,219 Mn. NII was higher by 4.7% than our estimates, led by the lower-than-expected cost of borrowings. CreditAccess Grameen reported a healthy performance where the core operating profits were better than our estimates.

CreditAccess Grameen (CREDAG) delivered a healthy operational
performance in 4QFY24, with 34% YoY growth in PAT to ~INR3.97b (inline).
4QFY24 NII grew ~42% YoY to ~INR8.8b and PPoP grew 36% YoY to
~INR6.8b. FY24 PAT grew ~31% YoY to ~INR5.1b.