Buy Credit Access Grameen; target of Rs 824: Geojit

Geojit's research report on Credit Access Grameen

CreditAccess Grameen Limited (CAGL) is one of the leading Microfinance NBFCs in India with high focus on Group lending and Retail finance with majority of its operation in South India. The growth of microfinance industry in India is a huge opportunity for NBFC MFIs as 41% of households in the country do not avail any banking services. We expect Net Interest Income to grow at 33% CAGR over FY19- FY22E driven by acquisition of Madura microfinance. Acquisition of Madura microfinance will strengthen the market leadership position of CAGL and diversify its geographic presence. Although 100% customers took moratorium for 3 months, 75% to 80% have started repayments, as rural areas were less impacted by lockdown.

Outlook

We expect PAT to grow to Rs 745cr in FY22E at 32% CAGR over FY19 to FY22E. • We value CAGL at 2.9x on FY22E Adj. BVPS and arrive at a target price of Rs 824 and recommend ‘Buy’ rating.

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