Buy CreditAccess Grameen; target of Rs 1985: Motilal Oswal

Motilal Oswal is bullish on CreditAccess Grameen recommended buy rating on the stock with a target price of Rs 1985 in its research report dated January 20, 2024.

Broker Research

January 21, 2024 / 14:51 IST

Buy

26 Aug, 2025 12:21

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Motilal Oswal's research report on CreditAccess Grameen

CreditAccess Grameen (CREDAG) delivered a healthy operational performance in 3QFY24, with ~64% YoY growth in PAT to ~INR3.5b. NII jumped 49% YoY to ~INR8b, with a stable NIM (reported) of ~13.1%. PPoP grew 59% YoY to ~INR6b, with scale benefits and positive operating leverage resulting in a cost-income ratio (CIR) of ~30% (PY: ~36%). Even with ~50bp reduction in lending rates from Dec’23 onwards, management maintained its NIM guidance of 12.7-12.8% and CIR of 31-32%. We model NIM (calc.) and CIR of ~14.1% and ~31%, respectively, in FY25E. Implementation of the Core Banking Solution (CBS) impacted hurt disbursements and customer acquisition in 3QFY24 resulting in customer acquisitions of ~270K (PQ: ~330K). Disbursements were affected in Nov’23 but exhibited a robust recovery in Dec’23. GNPA/NNPA deteriorated ~20bp/5bp QoQ to ~0.97%/~0.3% due to floods in Tamil Nadu and higher steady-state PAR from non-Karnataka states. This also led to annualized credit costs rising ~45bp QoQ to 2.3% (PQ: 1.8% and PY: 2.2%).

Outlook

While the current valuation of 2.5x Mar’26E P/BV is not inexpensive, CREDAG will continue to deliver robust return ratios, aided by a strong underlying business model. We reiterate our BUY rating with a revised TP of INR1,985 (based on a target multiple of 3.0x Mar’26E P/BV).

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