CreditAccess Grameen Ltd. share price target

CA Grameen, in its maiden analyst day (held on 18th May’23), has unveiled its journey to reach AUM of Rs500bn, implying 20-25% CAGR over the next 4-5 years, from Rs200bn in March’23. More importantly, the management highlighted that it has now built a self-sustainable business model with 20-25% AUM growth and >20% RoE.

We value CAGrameen at 3x Sep'24E BV to arrive at a target price of Rs 1,315/share, implying an upside of 11% from CMP.

E CreditAccess Grameen (CA Grameen) in Q4FY23 became the first NBFC-MFI to cross Rs200bn AUM in India and simultaneously demonstrated scalability with best-in- class asset quality metrics and profitability. Its industry-leading RoA / RoE at 5.5% / 24.0% respectively during Q4FY23 reflects its resilient business model.

Recommendation: We maintain our BUY recommendation on the stock.

Recommendation: We maintain our BUY recommendation on the stock.

CreditAccess Grameen (CAGL) continued to deliver industry-leading performance as reflected in Q3FY23 RoA / RoE at 4.6% / 18.8%, respectively - surpassing pre-covid level. Notably, Board approval for the extension of Mr. Udaya Kumar Hebbar as MD & CEO for another 2 years, post the expiry of his current term on June’23 (subject to shareholder approval), would ensure management continuity at the top.

We reiterate our BUY rating on CreditAccess Grameen (CA Grameen) and believe the
sharp correction (>10%) in stock price over past 15 days is unwarranted considering
the strong H1FY23 performance and sector tailwinds.