Buy CreditAccess Grameen; target of Rs 1500: Emkay Global Financial

Moneycontrol • 5 days ago

Original source

Key Investment Pillars

  • CreditAccess Grameen's (CREDAG) GLP growth accelerated to 19.5% YoY, driven by continued traction in the retail finance portfolio.
  • NIM improved by 70bps QoQ to 15.1%, supported by lower interest reversals in the group loan book, a higher share of individual loans, stable borrowing costs, and a stronger capital position.
  • Management plans to cut lending rates by 50bps each in 3Q and 4Q, while borrowing costs are expected to remain at 9.2-9.3% by Mar-27.
  • The company has raised its FY27 NIM guidance to 14.4-14.7% from 12.8-13.2% earlier.

Thesis Validation Checklist

  • Monitor AUM growth, which is expected to be around 20-25% in FY27.
  • Track the improvement in asset quality, with GNPA improving by 39bps QoQ to 1.8%.
  • Watch for the impact of drought-related stress in select districts of Maharashtra on credit costs, which are expected to remain within the guided range of 3-4% for FY27.
  • Keep an eye on the company's ability to maintain its strong capital position and improve its return on assets (ROA) to around 5% over FY27-29E.