Buy CreditAccess Grameen; target of Rs 1070: Motilal Oswal

Motilal Oswal's research report on CreditAccess Grameen

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%). Reported yields declined ~90bp QoQ to ~20.2%, while CoF was stable QoQ at 9.8%. Reported NIM contracted ~100bp QoQ to ~12.5%, primarily because of interest income reversal of INR750m. We model NIMs of 14.0%/14.1% for FY26/FY27 (FY25E: ~14%)

Outlook

With a strong capital position (Tier-1 of ~25%), it is well-equipped to navigate the near-term disruption in the MFI sector and will embark on a healthy loan growth trajectory once there is higher confidence in the reversal of this delinquency trend. Reiterate BUY with a revised TP of INR1,070 (based on 1.8x Sep’26E P/BV).