CreditAccess Grameen share price cracks 18% to hit a 52-week low after Q3 result; what should Indian investors do?

CreditAccess Grameen's share price fell 18% to a 52-week low of ₹750.05 on January 27 after the Q3 results. The company also faced a significant loss amounting to ₹99.52 crore, contrasting sharply with the profit of ₹353.34 crore reported during the same period last fiscal year.

Updated27 Jan 2025, 11:49 AM IST

CreditAccess Grameen share price cracks 18% to hit a 52-week low after Q3 result; what should Indian investors do? **(Agencies)**

CreditAccess Grameen share price cracked as much as 18 per cent to hit its fresh 52-week low of ₹750.05 in intraday trade on BSE on Monday, January 27, following the company's December quarter (Q3) result. Shares of CreditAccess Grameen opened at ₹851 against their previous close of ₹913.90 and plunged 18 per cent to the 52-week low level of ₹750.05. Around 10:15 AM, the stock traded 14.66 per cent down at ₹779.95.

CreditAccess Grameen Q3 result

On Friday, January 24, the non-banking financial company-micro finance institution (NBFC-MFI) reported a topline increase of 7.2 per cent year-on-year (YoY) for the December quarter of the current financial year.

However, the company also faced a significant loss amounting to ₹99.52 crore, contrasting sharply with the profit of ₹353.34 crore reported during the same period last fiscal year.

Operating income fell 54.11 per cent QoQ and 63.3 per cent year-over-year in Q3FY25, highlighting significant operational challenges faced by the company during this period. Earnings per share (EPS) stood at ₹24.4 for Q3, reflecting a decrease of 12.54 per cent year-over-year.

CreditAccess Grameen share price trend

CreditAccess Grameen shares reached their 52-week high of ₹1,659.95 on February 12 last year. At the current 52-week low of ₹750.05, the stock has declined by nearly 55 per cent from its one-year high. On a monthly scale, the stock has been falling since August last year.

Also Read | Stocks to buy: Raja Venkatraman recommends three stocks for today — 27 January

What should investors do?

After the significant correction, some brokerage firms have begun to see some growth potential in the stock.

Brokerage firm Motilal Oswal Financial Services maintained a buy call on the stock after the Q3 result, pegging the target price of ₹1,070, implying a 17 per cent upside potential.

However, the brokerage firm cut its FY25E and FY26E PAT (profit after tax) estimates by nearly 38 per cent and 11 per cent, respectively, to factor in higher credit costs.

"We estimate a nearly 17 per cent and 13 per cent CAGR in AUM (assets under management) and PAT, respectively, over FY24-27, leading to an RoA (return on assets) and RoE (return on equity) of nearly 4.4 per cent and 19 per cent, respectively, in FY26," said Motilal Oswal.

The brokerage firm highlighted the company's management commentary, which stated that peak delinquencies occurred in October and November 2024 and that new delinquency rates markedly improved in December 2024 and January 2025.

"As per the management, asset quality is expected to normalise by Q1FY26 with profitability projected to return to normal levels by Q2FY26," Motilal Oswal said.

The brokerage firm believes that sectoral pain in microfinance will continue for two to three more quarters, given that the balance sheet's stress must be provided for and subsequently written off for some semblance of ‘normalisation’.

"While the improvement in collections gives a glimmer of hope, we need to monitor the trends over the next three to four months before exuding confidence that this is indeed a trend reversal. Developments in Karnataka, while not overly concerning at this point, will need to be closely monitored, given that it is one of the core markets for CreditAccess Grameen," said Motilal Oswal.

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Disclaimer: The views and recommendations above are those of individual analysts, experts, and brokerage firms, not Mint. We advise investors to consult certified experts before making any investment decisions.

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First Published:27 Jan 2025, 10:17 AM IST

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