Buy CreditAccess Grameen; target of Rs 1500: Motilal Oswal

Motilal Oswal's research report on CreditAccess Grameen

CreditAccess Grameen’s (CREDAG) 1QFY26 PAT stood at INR602m (vs. est. INR842m). NII declined ~2% YoY to ~INR9b (in line). PPOP fell ~8% YoY to INR6.5b (in line). Cost-income ratio rose ~160bp QoQ to ~33.5% (PY: ~29% and PQ: ~32%). n Reported yields declined ~10bp QoQ to ~20.3% and CoF was down ~10bp QoQ at 9.7%. Reported NIM rose ~10bp QoQ to ~12.8%. We model NIM (calc.) of 15%/14.7% in FY26/FY27 (vs. ~14.6% in FY25). n Disbursements rose ~22% YoY to ~INR55b. AUM was flat QoQ but down ~1% YoY at ~INR261b (PY: ~INR263b). The borrower base declined ~5% QoQ to ~4.56m (PQ: ~4.7m). CREDAG added 51 branches during the quarter to reach 2,114 branches.

Outlook

CREDAG trades at 2.1x FY27E P/BV and its premium valuations over its MFI peers should be sustained, given its ability to bounce back to normalcy, much ahead of its peers. Reiterate BUY with an unchanged TP of INR1,500 (based on 2.5x Mar’27E P/BV).