Accumulate CreditAccess Grameen; target of Rs 1011: KR Choksey

KR Choksey recommended accumulate rating on CreditAccess Grameen with a target price of Rs 1011 in its research report dated October 29, 2024.

Broker Research

October 29, 2024 / 12:29 IST

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KR Choksey's research report on CreditAccess Grameen

Net Interest Income (NII) for Q2FY25 increased by 20.8% YoY (-2.1% QoQ) to INR 9,324 Mn. The Pre-Provisioning Operating Profits (PPOP) grew by 19.5% YoY (-5.2% QoQ) to INR 6,721 Mn in Q2FY25, led by growth in NII. The NBFC registered a net profit of INR 1,861 Mn in Q2FY25, representing a de-growth of 46.4% YoY (-53.2% QoQ). The operating growth was offset by higher provisions during the quarter, at INR 4,201 Mn as against INR 959 Mn in Q2FY24. There was a temporary increase in delinquencies across various geographies due to multiple factors. The NBFC expects these challenges to stabilize in Q3FY25E and business sentiment to improve in Q4FY25E.

Outlook

We have revised our P/ABV multiple downward to 1.75x from 2.6x to account for the deceleration in business momentum due industry headwinds and increase in credit costs. We, accordingly, revise our target price downwards to INR 1,011/share (earlier INR 1,630) and our rating to “ACCUMULATE” from “BUY” rating.

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