Buy CreditAccess Grameen, target price Rs 1,760: Motilal Oswal Financial Services
The current valuation of 2.2x FY26E P/BV is not expensive for a franchise that will continue to deliver healthy investor returns, aided by a strong underlying business model. We estimate a PAT CAGR of ~19% over FY24-FY26E, leading to RoA/RoE of 5...
Updated:
ETMarkets.com
Motilal Oswal Financial Services has buy call on CreditAccess Grameen Ltd. with a target price of Rs 1760. The current market price of CreditAccess Grameen is Rs 1407.95.
CreditAccess Grameen, incorporated in the year 1991, is a Mid Cap company (having a market cap of Rs 22843.35 Crore) operating in NBFC sector.
CreditAccess Grameen Ltd. key Products/Revenue Segments include Interest, Income From Financial Services, Other Services, Fees & Commission Income and Income From Sale Of Share & Securities for the year ending 31-Mar-2023.
Investment Rationale
CREDAG is well prepared to capitalize on the growing opportunity in the microfinance segment by: a) improving its ticket size with customer vintage (~48% borrowers still have a vintage of <3 years); b) adding new borrowers with a strong rural focus; c) improving branch productivity (~300 branches set up over the last two years); and d) expanding into relatively less-penetrated geographies.
We maintain our BUY rating on the stock with a TP of INR1,760 (based on 2.7x FY26E P/BV). Downside risks: a) relatively higher concentration in its top three states, which contribute ~73% to the GLP mix; and b) macroeconomic uncertainties and external events that may lead to cyclicality in its asset quality
For the quarter ended 31-12-2023, the company has reported a Consolidated Total Income of Rs 1295.23 Crore, up 3.82 % from last quarter Total Income of Rs 1247.59 Crore and up 42.38 % from last year same quarter Total Income of Rs 909.72 Crore. Company has reported net profit after tax of Rs 353.34 Crore in latest quarter.
Promoter/FII Holdings
Promoters held 66.66 per cent stake in the company as of 31-Dec-2023, while FIIs owned 12.0 per cent, DIIs 15.79 per cent.
CreditAccess Grameen, incorporated in the year 1991, is a Mid Cap company (having a market cap of Rs 22843.35 Crore) operating in NBFC sector.
CreditAccess Grameen Ltd. key Products/Revenue Segments include Interest, Income From Financial Services, Other Services, Fees & Commission Income and Income From Sale Of Share & Securities for the year ending 31-Mar-2023.
Investment Rationale
CREDAG is well prepared to capitalize on the growing opportunity in the microfinance segment by: a) improving its ticket size with customer vintage (~48% borrowers still have a vintage of <3 years); b) adding new borrowers with a strong rural focus; c) improving branch productivity (~300 branches set up over the last two years); and d) expanding into relatively less-penetrated geographies.
We maintain our BUY rating on the stock with a TP of INR1,760 (based on 2.7x FY26E P/BV). Downside risks: a) relatively higher concentration in its top three states, which contribute ~73% to the GLP mix; and b) macroeconomic uncertainties and external events that may lead to cyclicality in its asset quality
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Financials For the quarter ended 31-12-2023, the company has reported a Consolidated Total Income of Rs 1295.23 Crore, up 3.82 % from last quarter Total Income of Rs 1247.59 Crore and up 42.38 % from last year same quarter Total Income of Rs 909.72 Crore. Company has reported net profit after tax of Rs 353.34 Crore in latest quarter.
Promoter/FII Holdings
Promoters held 66.66 per cent stake in the company as of 31-Dec-2023, while FIIs owned 12.0 per cent, DIIs 15.79 per cent.
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