Buy CreditAccess Grameen; target of Rs 2,000: Emkay

Emkay is bullish on CreditAccess Grameen has recommended buy rating on the stock with a target price of Rs 2,000 in its research report dated May 08, 2024.

Broker Research

May 09, 2024 / 14:27 IST

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26 Aug, 2025 12:21

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Emkay's research report on CreditAccess Grameen

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). Company attributes the slight uptick in GNPA ratio (up by 21bps QoQ) to 1.2% mainly to the impact of floods in TN and expansion into new geographies – where credit experience initially is bound to be different vs its home state. For FY25-28, Company has upgraded its RoA guidance to 5.4-5.5% on the back of a better margin trajectory (12.7-12.9%) and cost ratios, partly offset by increase in credit cost (2.2-2.4%) factoring-in the normalization in asset quality.

Outlook

However, we conservatively build-in the higher credit cost, given the need to build-in contingent provision buffers for absorbing any initial asset quality shock and, thus, expect CredAG to report RoA @4.8-5.4%/RoE @20- 23% over FY25-27E. We retain BUY with TP of Rs 2,000/sh, rolling fwd on 3x FY26E ABV. CredAG remains our preferred pick in the MFI space, given its superior return ratios and well placed management succession, unlike peers.

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