Prabhudas Lilladher has come out with its report on CreditAccess Grameen Ltd. The research firm has recommended to "Subscribe" the IPO in its research report as on August 06, 2018.
The third largest NBFC-MFI (next to Bharat Financial Inclusion), Credit Grameen Access Ltd with AUM of Rs 49,747 mn headquartered in Bangalore is promoted by South-east Asia focused Credit Access NV (99% holding) specializing in MSE financing. With thrust on providing microloans to women customers (JLG model) predominantly in rural areas, Credit Access follows district based expansion model.Valuation and Outlook
RoEs for the company have declined almost 800 bps in past 3 years and 500 bps in past 4 years. High opex intensive business (38% avg cost-income), elevated credit costs (3%+ past 2 years) have restricted RoEs to 12%. Against this backdrop, post-IPO valuations (30x+ P/E and 2.9x P/B FY18, 2.6X FY19E) appear expensive and believe stepping up return profile is the key. Any improvement in credit costs and NIMs being retained at 10%+ levels should prove as key catalysts. While, we recommend Subscribe for LONG TERM, do not expect any short term gains.
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