YES Securities' research report on CreditAccess Grameen
CREDAG delivered an in-line PAT in Q3 FY23, that reflected stronger GLP growth, higher NII/PPOP and still elevated credit cost. The texture of disbursements remains enthusing, with accelerating pace of new borrower addition (significant new-to-credit within) mainly in newer markets and loan ticket/exposure per borrower under check. The co. delivered RoA/RoE of 4.6%/18.8% (material improvement over Q2 FY23), despite continuance of significant write-off of residual Covid-related stress. With the delivery of enhanced outcomes in Q3, CREDAG reiterated its annual consolidated performance guidance of 24-25% GLP growth and 4-4.2% RoA/16-18% RoE. The co. has taken requisite price actions to factor relatively moderate experience of collections (delinquency flow fwd.) in MMFL’s portfolio.
The stock has previously traded at multiples of >3.5x in a stable operating environment with 16-18% RoE delivery. This time CREDAG’s RoE delivery would be far superior at 21-22% due to scale and pricing benefits. Remains a BUY with 12m PT of Rs1270.
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