Accumulate CreditAccess Grameen; target of Rs 1086: KR Choksey

KR Choksey's research report on CreditAccess Grameen

CreditAccess Grameen Limited (CREDAG), in its interim business update, reported a healthy recovery in its loan portfolio growth, with its Gross Loan Portfolio (GLP) increasing by 2.36%, reaching INR 253,950 Mn in February 2025, compared to INR 248,100 Mn in December 2024. The expansion was driven by borrower additions of over 0.15 Mn onboarded in January and February 2025. While most geographies exhibited stable growth, Karnataka saw relatively muted expansion due to regulatory uncertainties, impacting loan disbursements and collections in the region. Despite short-term pressures, asset quality showed signs of stability across most operating geographies, except for Karnataka, which experienced a sharp increase in delinquencies. The company's Portfolio at Risk (PAR 0+) rose to 7.5% in February 2025 from 6.8% in December 2024, largely due to stress in Karnataka, where PAR 0+ surged from 4.3% to 7.9%. Other states like Tamil Nadu witnessed a marginal deterioration in asset quality, with PAR 0+ rising from 8.9% to 9.3%, primarily due to the lagged impact of heavy rains and cyclones in late 2024.

Outlook

This revision accounts for faster-than-expected asset quality stabilization, sustainable loan portfolio expansion, and the recent stock price uptrend. This implies a potential upside of 10.3% from the current market price. Accordingly, we reiterate our ACCUMULATE rating, as we see a favorable risk-reward balance with upside potential in the long term.