CreditAccess Grameen surges 40% in 3 months on improved asset quality

The stock hit a 52-week high of Rs 878 after it rallied 15 per cent on the BSE in Friday's intra-day trade

Shares of CreditAccess Grameen hit a 52-week high of Rs 878 as they surged 15 per cent on the BSE in Friday's intra-day trade, in an otherwise range-bound market, on expectations of healthy earnings. The stock of the microfinance institution surpassed its previous high of Rs 832 touched on March 14, 2022.

At 09:50 AM, it traded 6 per cent higher at Rs 853 on the BSE. In comparison, the S&P BSE Sensex was down 0.08 per cent at 57,548 level.

In the past one week, the stock has outperformed the market by surging 15 per cent as compared to 1 per cent decline in benchmark index. Over the past three months, it has rallied 40 per cent as against 1 per cent rise in the Sensex.

On Wednesday, March 23, 2022, the company's board approved the proposal of raising up to Rs 1,500 crore in different tranches through public issue of non-convertible debentures (NCDs) in domestic market. 

Meanwhile, for October-December quarter (Q3FY22), CreditAccess Grameen's consolidated profit after tax (PAT) increased by 248 per cent year-on-year (YoY) to Rs 117 crore on the back of strong operational performance coupled with consistent improvement in asset quality. Consolidated net interest income (NII) grew 35.5 per cent YoY to Rs 412 crore.

The company's consolidated Gross Loan Portfolio (GLP) rose by 18.4 per cent YoY to Rs 14,587 crore. The consolidated numbers for CreditAccess Grameen also included the performance of its subsidiary Madura Micro Finance Limited (MMFL).

Portfolio stress continued to normalise, with PAR-0 falling sharply from its peak of 30.6 per cent to 6.8 per cent, while the GNPA moderated to 6 per cent (Q2FY22: 7.7 per cent) for the consolidated entity.

High collection efficiencies (97 per cent including arrears), low number of zero-payment borrowers (3.5 per cent of AUM), and adequate provisioning (GS-III PCR at 58 per cent) suggest that moderate credit costs could sustain, analysts at HDFC Securities had said in the result update report.

"CreditAccess Grameen is incrementally focusing on driving portfolio growth (+18.4 per cent YoY) in the MFI and retail finance portfolio, with around 48 per cent of new customer additions in 9MFY22 from outside the top-3 states. With diminishing stress pool, the company is well- geared to drive portfolio growth in a risk-calibrated manner, well ahead of peers, and it remains our top pick among MFI lenders," the brokerage firm said. The stock, however, is above its target price of Rs 848 per share.