Buy CreditAccess Grameen; target of Rs 1690: Motilal Oswal

buy

Motilal Oswal's research report on CreditAccess Grameen

CreditAccess Grameen (CREDAG) guided ~70–100bp higher credit costs in FY26 and credit costs of 4.0-4.5% in FY27 (including 70–80bp higher provisions from the ECL revision). While the upward revision in credit cost guidance is a nearterm negative, underlying business trends and expected recovery in 2H remain on track. CREDAG’s 2QFY26 PAT stood at INR1.3b (vs. MOFSLe at INR900m). NII was flat YoY at ~INR9.3b (in line). PPOP grew ~3% YoY to INR6.9b (in line). The cost-to-income ratio dipped ~1pp QoQ to ~32.5% (PQ: ~33.5%/PY: ~30.6%). Reported yields improved ~40bp QoQ to ~20.7%, and CoF declined ~10bp QoQ to 9.6%. NIM improved ~50bp QoQ to ~13.3%. We model NIM (calc.) of 14.9% each in FY27/FY28 (vs. ~15.3% in FY26E).

Outlook

We estimate a CAGR of 18%/52% in AUM/PAT over FY25-28, leading to an RoA/RoE of ~4.7%/18.3% in FY28. CREDAG trades at 2.6x FY27E P/BV, and its premium valuations over its MFI peers would be sustained. We reiterate our BUY rating with a revised TP of INR1,690 (based on 2.7x Sep’27E P/BV).

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CreditAccess Grameen - 29102025 - moti