Motilal Oswal's research report on CreditAccess Grameen
CreditAccess Grameen (CREDAG) has emerged stronger from the recent MFI stress, with an improved operating momentum, a more resilient portfolio, and a structurally stronger business mix supported by an increasing focus on retail finance. The company is strategically transitioning from a traditional MFI into a diversified rural financial services platform aimed at building long-term, household-level financial relationships across income cycles. With strong disbursement momentum, normalized asset quality trends, retail-led diversification, and improving spreads, CREDAG is well-positioned to capitalize on the next phase of credit growth. FY26 marked a notable shift toward retail finance-led growth, with retail assets rising to ~18.1% of AUM from ~5.9% in FY25, aided by accelerated internal customer migration and product diversification. With substantial untapped potential across its ~4.4m customer base, non-MFI segments are likely to drive the next phase of growth, underpinning FY27 AUM growth guidance of ~20-25%, while the core microfinance business is expected to maintain a stable growth trajectory of ~10-12%.
Outlook
We model an AUM/NII/PPoP/PAT CAGR of 21%/18%/16%/59% over FY26–28E, with RoA/RoE improving to ~4.6%/~18.8% by FY28E. At ~2.6x FY27E P/BV, the stock remains attractively valued. We reiterate our BUY rating with a TP of INR1,780 (premised on 2.5x FY28E BVPS).
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CreditAccess Grameen - 0207026 - moti