Accumulate CreditAccess Grameen; target of Rs 988: KR Choksey

Accumulate

KR Choksey's research report on CreditAccess Grameen

Net Interest Income (NII) grew by 7.4% YoY but declined by 7.6% QoQ to INR 8,617 Mn, missing our estimates due to a contraction in the AUM. The Net Interest Margin (NIM) for the quarter dropped to 12.5%, compared to 13.0% in Q2FY25 and 13.1% in Q3FY24. Pre-Provisioning Operating Profit (PPOP) for Q3FY25 increased by 3.5% YoY but declined by 7.3% QoQ to INR 6,229 Mn. The NBFC reported a net loss of INR 995 Mn in Q3FY25, primarily due to elevated provisions of INR 7,519 Mn. CREDAG plans to drive growth by strengthening its retail finance portfolio in core geographies while adopting a cautious approach to expansion in non-core markets. We trim our earnings by 11.3%/ 1.7%, for FY26E/ FY27E, respectively, to reflect a further slowdown in business growth and persistently high credit costs.

Outlook

We have rolled over our valuation to FY27E, adjusting our P/ABV multiple to 1.5x (earlier 1.75x FY26E). Consequently, we have revised our target price to INR 988/share (previously INR 1,011) on FY27E adj. book value of 658.4 and maintained our “ACCUMULATE” rating.

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CreditAccess Grameen - 28012025 - kr