Target: ₹1,042
CMP: ₹964.80
Near-term outlook for CreditAccess Grameen is challenged, led by cautionary growth taking precedence and regional disparity with respect to early bucket delinquencies, per a deep-dive into business trends based on Feb ’25 update.
So, CreditAccess Grameen may miss its FY25 growth and RoA guidance of 7-8 per cent and 2.3-2.4 per cent, respectively. On the positive side, through Jan-Feb ’25, attrition run rate has stabilised and borrower acquisition is back in the reckoning. However, business recalibration and judicious customer accretion may remain at the forefront of the business strategy.
We pare FY25E earnings estimates a steep 29 per cent, factoring in the impact of Karnataka ordinance. We also pare FY26E estimates 13 per cnet due to spillover. With growth struggling at 4 per cent in FY25 before it likely picks up to 20 per cent in FY26E and RoA falling abysmally lower (2 per cent in FY25; 4-4.5 per cent in FY26E-27E versus 5 per cent+ during heydays), CreditAccess Grameen’s resilience will be tested.
With meaningful derating in valuation and most negative parameters expectedly peaking out in Q4, we maintain Accumulate rating.