CreditAccess Grameen Ltd. share price target

The company continues to demonstrate strong disbursement traction, while margins should remain resilient supported by declining funding costs, recent pricing actions, and operating leverage from scale.

CreditAccess Grameen (CREDAG) guided ~70–100bp higher credit costs in FY26 and credit costs of 4.0-4.5% in FY27 (including 70–80bp higher provisions from the ECL revision).

About the stock: CreditAccess Grameen is one of the largest microfinance companies in India, having over 3 decades of experience, over 25,904 crore AUM and a strong distribution channel to provide financial aid to low-income households. It operates in over 16 states and 1 UT with 2,209 branches, having a growing employee base of 21,701 Q2FY26 performance: CreditAccess Grameen reported a sequential recovery in Q2FY26, driven by margin expansion and lower credit cost. AUM was flat QoQ (3.1% YoY) as disbursements fell 2% QoQ amid weather disruptions and slower...

We recommend a BUY on the stock with a target price of Rs 1,461/share, implying an upside of 10% from the CMP.

Net Interest Income (NII) for Q1FY26 declined by 1.6% YoY (+7.0% QoQ) to INR 9,370 Mn, in-line with our estimates. The Net Interest Margin (NIM) for Q1FY26 increased by 10bps sequentially to 12.8%, led by decline in cost of borrowings, partially offset marginal decline in portfolio yield.

CreditAccess Grameen’s (CREDAG) 1QFY26 PAT stood at INR602m (vs. est. INR842m). NII declined ~2% YoY to ~INR9b (in line). PPOP fell ~8% YoY to INR6.5b (in line).

CA Grameen (Grameen) continued to improve on asset quality metrics in Q1FY26: monthly PAR 15+ accretion rate fell to 0.46% in Jun’25 vs. 0.84% in Mar’25 vs. 1.34% in Nov’24 and credit cost fell for the straight third quarter with total provisions at INR 5.7bn in Q1FY26 vs INR 5.8bn in Q4FY25 vs INR 7.5bn in Q3FY25.

We maintain our BUY recommendation on the stock.

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.

Stress in MFI intensifies pressure on credit growth and asset quality

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%).

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.