CreditAccess Grameen Ltd. share price target

declined by 10 bps compared to FY24, settling at 12.9%. Operating expenses increased by 11.0% YoY to Rs.1,108 cr. in FY25, while a decline in fee and other income led to a marginal rise in the cost-to-income ratio to 30.7%, up from 30.5% in the previous year. Despite a sharp 327.1% YoY increase in provisions due to accelerated write-offs targeting delinquent accounts, the company reported an annual profit of Rs.531.4 cr. Gross NPA and Net NPA rose sharply to 4.8% and 1.7%, respectively, from 1.2% and 0.4% in FY24, reflecting a notable deterioration across all PAR buckets. While collection efficiency remained subdued for the first three quarters of the year, it showed signs of recovery towards the end of FY25, indicating early momentum in asset quality stabilization....

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).

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

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.

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.

We maintain our BUY recommendation on the stock.

Beat on operating metrics; maintained guidance

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.

CredAG continues to report strong GLP growth at 32% YoY/14% QoQ. This,
coupled with stable margins and higher other income and partially offset by
higher LLP and staff costs (due to one-off provision of Rs260mn towards bonus
and ex-gratia), led to an almost in-line PAT at Rs4bn/RoA @5.7% (Emkay PAT:
Rs3.9bn).