CreditAccess Grameen Ltd. share price target

As of September 30, 2023, GLP (Gross Loan Portfolio) reported a 36.0% YoY/ 3.1% QoQ growth at INR 2,24,880 Mn on the back of improved customer base and lower base of last year. CREDAG has seen a healthy customer addition of 0.34 Mn in Q2FY24, of which ~40.0% came outside of its top 3 states.

We maintain our BUY recommendation on the stock.

CA Grameen continued to deliver strong operating performance in Q2FY24 as reflected in RoA sustaining at >5% and RoE at 25% for three consecutive quarters. Profitability was largely driven by steady AUM growth, efficient liability management (CoF increased by only 30bps since Sep’21) and controlled asset quality.

We maintain our BUY recommendation on the stock.

In a seasonally weak quarter, CA Grameen reported strong earnings beat – PAT was up 17% QoQ at INR 3.4bn (I-Sec: INR 3bn), supported by strong topline growth of 9% QoQ and credit cost moderating to normalised level of 40bps (non-annualised). The beat poses an upside risk to FY24 guidance, especially on NIM (guidance at 12-12.2% vs 13% in Q1FY24) and cost-to-income ratio (guidance at 35-36% vs 31% in Q1FY24).

A cracking start to FY24

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.