Purpose: £ 1,461
CMP: £ 1,359.75
Creditaccess Grameen (CA grameen) is a nationally oriented microfinancier who is mainly suitable for female borrowers who do not have access to the formal banking sector. The collective efficiency improved to 93.2 percent in Q1FY26 (93.5 percent in June) versus 91.9 percent in Q4FY25, with improvement visible in all geographies. The management indicated that the collections were stable in July and expects a similar strong trend to take place in August-September.
With par (risk of portfolio) to 0.46 percent in June versus 0.84 percent in March, which indicates lower incremental credit costs. Management continues to trust in credit costs that demand meaningful in Q2 and further down in H2FY26.
Ca Grameen wants to maintain a monthly customer addition of one LAKH customers, a grim improvement after a softer H1. The heavy work of the growth of the Gross Loan Portfolio (GLP) in FY26 would be done by the retail financing portfolio. The company’s focus will remain on pursuing a balanced growth in the MFI portfolio, while the on-boarding quality new-to-credit customers.
It expects NIMs to stay in FY26 at 12.6-12.8 percent, with the impact of higher interest rates that are visible in H1.
Ca Grameen has successfully navigated the challenges of the recent MFI credit -Downcycle and showed resilience because it is gradually closer to the normality. We expect it to return to its ROA delivery of 4.5+ percent of FY27E, supported by a strong GLP growth, a stable margin profile, controlled OPEX and meaningfully lower credit costs. We take into account a strong GLP/NII/profit CAGR growth of 18/13/54 percent compared to FY25-28E, with ROA/ROE delivery of 4.5-4.6 percent/18-19 percent for the same period. We recommend a purchase on the shares with a target price of £ 1,461/share, which implies an advantage of 10 percent compared to the CMP.
Published on September 17, 2025
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