Buy CreditAccess Grameen; target of Rs 1155: Motilal Oswal

Motilal Oswal's research report on CreditAccess Grameen

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. NII in 2QFY25 grew ~22% YoY to ~INR9.3b and PPoP rose 19% YoY to ~INR6.7b. Cost-to-income ratio stood at ~31% (PY: ~32% and PQ: ~29%). Reported yields improved ~10bp QoQ to ~21.1%, and CoF was stable QoQ at 9.8%. Reported NIM rose ~50bps QoQ to ~13.5%. Average disbursement yields remained stable QoQ at ~21.3% in 2QFY25. We model NIMs of 14.7%/14.5% for FY25/FY26.

Outlook

With a strong capital position (Tier-1 of ~25%), it is well equipped to navigate any potential disruptions in the sector. Reiterate BUY with a revised TP of INR1,155 (based on 1.8x Sep’26E P/BV).