Target Price: ₹1,461 | Current Market Price (CMP): ₹1,359.75
CreditAccess Grameen (CA Grameen), a microfinance institution focused on rural areas, primarily serves women borrowers who are often excluded from the formal banking system. The company reported a collection efficiency of 93.2% for Q1FY26, a slight decrease from 93.5% in June but an improvement compared to 91.9% in Q4FY25, indicating enhanced performance across all regions. Management noted that collections remained stable in July and anticipate this positive trend to continue through August and September.
As of June, the portfolio at risk (PAR) has decreased to 0.46%, down from 0.84% in March, which suggests a reduction in incremental credit costs. The management expressed confidence that credit costs will notably decline in Q2 and continue to decrease in the second half of FY26.
CA Grameen aims to onboard one lakh new customers monthly, a significant recovery following a softer first half. The Retail Finance segment is expected to drive the gross loan portfolio (GLP) growth for FY26, while the focus will also be on balanced growth in the microfinance institution (MFI) segment and securing quality new borrowers.
The company projects its net interest margins (NIMs) will remain stable between 12.6% and 12.8% in FY26, with effects from higher interest reversals expected in the first half of the year.
Despite recent challenges in the MFI credit sector, CA Grameen has demonstrated resilience and is gradually returning to normal operational levels. Analysts predict a rebound to return on assets (RoA) of 4.5% or higher by FY27, underpinned by robust GLP growth, a consistent margin profile, controlled operating expenses, and considerably reduced credit costs. Expectations include a compound annual growth rate (CAGR) of 18% in GLP, 13% in net interest income (NII), and 54% in earnings from FY25 to FY28. Analysts project an RoA of 4.5-4.6% and return on equity (RoE) of 18-19% over the same timeframe. A buy recommendation has been issued for the stock, with a target price set at ₹1,461 per share, which represents a potential upside of 10% from the current market price.
Published on September 17, 2025
