Accumulate CreditAccess Grameen; target of Rs 1400: Deven Choksey

Deven Choksey's research report on CreditAccess Grameen

Net Interest Income (NII) for Q1FY26 declined by 1.6% YoY (+7.0% QoQ) to INR 9,370 Mn, in-line with our estimates. The Net Interest Margin (NIM) for Q1FY26 increased by 10bps sequentially to 12.8%, led by decline in cost of borrowings, partially offset marginal decline in portfolio yield. Pre-Provisioning Operating Profit (PPoP) declined by 7.9% YoY (+3.0% QoQ) to INR 6,340 Mn., in-line with our estimates. Provisions stood at INR 5,719 Mn. (+227.6% YoY/ -1.9% QoQ), to maintain the asset quality. Net profit declined by 84.9% YoY (+27.5% QoQ) to INR 602 Mn., sharply below our estimates led by elevated credit costs and continued write-offs.

Outlook

We reiterate our “ACCUMULATE” rating on the stock, despite factoring of muted earnings in the short-term led by elevated write-offs and declining loan book in the H1FY26. We expect a sharper decline in write-offs, and strong growth momentum in loan book H2FY26 onwards, which should drive re-rating of the stock.