CreditAccess Grameen shares zoom over 12% on strong Q2 results. Should you buy, sell or hold?

Shares of non-banking financial company-micro finance institution (NBFC-MFI) CreditAccess Grameen zoomed over 12% to Rs 1,560 in Monday’s trade on BSE after the firm reported a 98% year-on-year (YoY) jump in net profit at Rs 347 crore on the back of strong business growth. The net profit was Rs 175 crore in the year-ago quarter.

The lender’s total income rose by 53% at Rs 1,248 crore, while net interest income rose nearly 50% at Rs 772 crore. Pre-provision operating profit increased by 68% at 563 crore.

The NBFC-MFIs gross loan portfolio grew 36% year-on-year (YoY) to Rs 22,488 crore, while the customer base expanded 21% to 46.03 lakh at the end of September.

The gross non-performing assets ratio was 0.77%, while net NPA was 0.24%. The lender has written off bad loans amounting to Rs 76.5 crore from the balance sheets.

At 11.21 am, the scrip was trading 8.8% higher at Rs 1,511.7 on BSE. The stock has also surged nearly 70% year-to-date, while it has rallied over 130% in the past 2 years.

Should you buy CreditAccess Grameen’s stock? Here’s what analysts say:

YES Securities
YES Securities retained its Buy rating CreditAccess Grameen with a target price of Rs 1,825.”We upgrade earnings estimates by 7-9% for the second consecutive quarter with profitability sustaining at higher levels. We estimate a CAGR of 25% in GLP, 39% in PPOP, and 47% in earnings over FY23-25 barring any external shocks. Attributes like high customer retention/borrower vintage, lower field attrition, industry-best loan processes, policies and pricing, stronger quality control and audit mechanisms, etc. drive the company’s sturdier growth and profitability,” it said.

JM Financial
JM Financial maintained its Buy rating CreditAccess Grameen with a target price of Rs 1,550.

“We expect valuations to be led by a) further pick-up in growth momentum in the second half, b) superior asset quality, and c) strong return metrics. We expect the NIMs performance to sustain from hereon with continued growth momentum, which entails robust return ratios of 5.5% RoA and 23.7% RoE in FY25E,” it said.

HDFC Securities
HDFC Securities maintained its Buy rating CreditAccess Grameen with a revised target price of Rs 1,650.

“We raise our FY24E/FY25E earnings estimates by 15%/13% for sustained improvement in operating metrics; maintain BUY, with a revised TP of Rs 1,650 (3.0x Sep-25 ABVPS),” it said.

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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)