CreditAccess Grameen Ltd. share price target

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.

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).