CreditAccess Grameen shares decline 3% as Nomura downgrades to 'reduce'

CreditAccess shares have tanked 30 percent since the start of the year.

Shares of CreditAccess Grameen were off to a weak start on the bourses after declining 3 percent to Rs 1,088 in morning trade on October 11 after Nomura downgraded the stock to 'reduce' from 'neutral' and slashed its price target.

With Rs 950 as its target price, the international brokerage implies a downside of about 15 percent from the last close of Rs 1,119 per share on the NSE. CreditAccess shares have tanked 30 percent since the start of the year.

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The firm highlighted several concerns, including potential disruptions from upcoming state elections in Maharashtra, Bihar, and Jharkhand. CreditAccess is facing a sharp decline in disbursements and AUM growth, coupled with deteriorating asset quality.

Nomura pointed out that the MFI sector faces multiple headwinds, with asset quality issues expected to persist in the medium term due to a steep rise in PAR (portfolio at risk) across buckets. Additionally, rising NPAs will lead to interest income reversals, negatively impacting the company’s yield and NIM profile.

On October 10, CreditAccess Grameen reported a 12 percent year-on-year growth in assets under management (AUM) to Rs 25,133 crore for the September quarter, up from Rs 22,248 crore last year.

However, sequentially, AUM declined by 4 percent from Rs 26,304 crore in the June quarter, according to the lender's stock exchange filing. Disbursements fell 19 percent to Rs 4,004 crore from Rs 4,966 crore in the same period last year and dropped 11 percent compared to Rs 4,476 crore in the June quarter. The lender also saw a notable decline in asset quality during the quarter.

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