1 month ago
Motilal Oswal is bullish on CreditAccess Grameen recommended buy rating on the stock with a target price of Rs 1760 in its research report dated March 27, 2024.
Broker Research
March 28, 2024 / 03:12 PM IST
Buy
Motilal Oswal's research report on CreditAccess Grameen
CREDAG is well prepared to capitalize on the growing opportunity in the microfinance segment by: a) improving its ticket size with customer vintage (~48% borrowers still have a vintage of <3 years); b) adding new borrowers with a strong rural focus; c) improving branch productivity (~300 branches set up over the last two years); and d) expanding into relatively lesspenetrated geographies. CREDAG operates in a joint liability group (JLG) model and differentiates itself in the flexibility it provides to customers through its nuanced approach. The company also provides customers with the flexibility to choose the repayment frequency (weekly/bi-weekly/monthly) based on their cash flows. Weekly center meetings are held with customers, irrespective of their repayment frequencies.
Outlook
We maintain our BUY rating on the stock with a TP of INR1,760 (based on 2.7x FY26E P/BV). Downside risks: a) relatively higher concentration in its top three states, which contribute ~73% to the GLP mix; and b) macroeconomic uncertainties and external events that may lead to cyclicality in its asset quality.
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