Broker’s Call: CreditAccess Grameen (Buy)

Target: ₹1,461

CMP: ₹1,359.75

CreditAccess Grameen (CA Grameen) is a rural-focused microfinancier that caters mainly to women borrowers who lack access to the formal banking sector. Its collection efficiency improved to 93.2 per cent in Q1FY26 (93.5 per cent in June) vs 91.9 per cent in Q4FY25, with improvement visible across all geographies. The management indicated that the collections in July have been stable and expects a similar strong trend to continue over August-September.

With PAR (portfolio at risk) down to 0.46 per cent in June vs 0.84 per cent in March, indicating lower incremental credit costs. The management remains confident of credit costs tapering meaningfully in Q2 and further down in H2FY26.

CA Grameen aims to maintain a monthly customer addition run-rate of one lakh customers, a stark improvement after a softer H1. The heavy lifting on gross loan portfolio (GLP) growth in FY26 would be done by the Retail Finance portfolio. The company’s focus will remain on pursuing balanced growth in the MFI portfolio while onboarding quality new-to-credit customers.

It expects NIMs to remain range-bound at 12.6-12.8 per cent in FY26, with the impact of higher interest reversals being visible in H1.

CA Grameen has been successfully navigating the challenges of the recent MFI credit downcycle and exhibited resilience as it gradually inches closer to normalcy. We expect it to revert to its RoA delivery of 4.5+ per cent from FY27E, supported by strong GLP growth, steady margin profile, controlled opex, and meaningfully lower credit costs. We factor in a strong GLP/NII/Earnings CAGR growth of 18/13/54 per cent over FY25-28E, with RoA/RoE delivery of 4.5-4.6 per cent/18-19 per cent over the same period. We recommend a BUY on the stock with a target price of ₹1,461/share, implying an upside of 10 per cent from the CMP.

Published on September 17, 2025