CreditAccess Grameen rises after acquisition

CreditAccess Grameen rose 2.80% to Rs 770 after the company announced acquisition of Madura MicroFinance.

CreditAccess Grameen (CAGL) announced that it has signed definitive agreements for acquisition of a controlling majority in Madura MicroFinance (MMFL) and subsequently, a merger of MMFL into CAGL.

CAGL will acquire 100% stake in MMFL in a two-step process. In the first leg, CAGL will acquire up to 76.2% stake in MMFL from its existing shareholders for cash and in the second stage, MMFL shall be merged into CAGL through a scheme of arrangement.

As part of the merger, the residual shareholders of MMFL will receive shares of CAGL at the share swap ratio proposed in the scheme.

The business acquired from MMFL will continue to operate as a separate division until the integration of business and processes is complete. All employees of MMFL will become employees of CAGL upon merger. MMFL's promoter, Dr. Tara Thiagarajan, will act as an advisor to the board of directors of CAGL after the merger.

The transaction is subject to the approval of Reserve Bank of India, the Securities and Exchange Board of India/stock exchanges, National Company Law Tribunal and such other regulatory approvals as may be required. The announcement was made during trading hours today, 27 November 2019.

Shares of CreditAccess Grameen rose 3.68% in two trading sessions to its current market price of Rs 770 from its recent closing low of Rs 742.60 on Monday, 25 November 2019.

Meanwhile, the S&P BSE Sensex was up 108 points or 0.27% to 40,929.56.

The stock was trading in the range of Rs 754.35 to Rs 787.85 so far during the day.

In the past one month, shares of CreditAccess Grameen jumped 14.31%, outperforming the Nifty Financial Service index's 6.25% rise in the same period.

On the technical front, the stock's RSI (relative strength index) stood at 62.24. The RSI oscillates between zero and 100. Traditionally the RSI is considered overbought when above 70 and oversold when below 30.

The stock was currently trading above its 50-day moving average (DMA) placed at Rs 674.68 and its 200 DMA placed at Rs 544.66.

CreditAccess Grameen's net profit rose 37.3% to Rs 100.88 crore on 26.6% surge in total income to Rs 392.65 crore in Q2 September 2019 over Q2 September 2018.

CreditAccess Grameen is engaged in microfinance sector. Its services are focused towards the rural poor and low income households particularly women.

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