CreditAccess Grameen Stock Analysis: Strong Jumps 19% After RBI Rule Change
Business and Industry Overview:
CreditAccess Grameen gives small loans to women in villages to help them start or grow businesses. It has 2,059 branches in 422 districts across 16 states and 1 union territory in India. Its parent company, CreditAccess India B.V., has been helping small businesses for over 10 years. It is the biggest microfinance company in India, giving₹26,700 crore in loans in FY24, up from ₹16,500 crore in FY22. It has 49 lakh customers, and 84% live in villages. Most loans (93%) are for businesses, 4% for home improvements, and 3% for shops. The company is better at getting money back, reducing unpaid loans (GNPA from 3.6% in FY22 to 1.18% in FY24 and NNPA from 0.94% to 0.35%). It makes more profit (NIM grew from 11% to 13%). It opened more branches, from 1,600 in FY22 to 1,960 in FY24, with many in Karnataka (17%), Maharashtra (15%), Tamil Nadu (20%), and Madhya Pradesh (8%). The top 10 districts give 17% of total loans. It started new loans for businesses, homes, gold, and two-wheelers. It uses better technology to make banking fast and easy. The government first asked for ₹2,333 crore in tax, but the court reduced it to ₹122.63 crore. The company plans to grow loans by 23%-24% in FY25 and 20%-25% every year until FY28 while keeping good profits.
NBFCs are companies that give loans and other money services to people and businesses, especially those who cannot easily get loans from banks. They have grown a lot and now give home loans, business loans, and personal loans. This growth is because more people need money, the government is helping, and technology is making things easier. NBFCs use mobile apps and websites to give loans quickly and work with banks and other companies to help more people. But they also have problems like strict rules, money risks, and online safety issues. Even with these challenges, NBFCs will keep growing and helping more people and businesses in India. Non-Banking Financial Companies (NBFCs) have witnessed significant growth in India’s financial ecosystem, playing a crucial role in credit expansion and financial inclusion. CreditAccess Grameen holds a 6% market share in the overall microfinance industry. Market Cap ₹ 15,591 Cr.
Latest Stock News:
The stock price of CreditAccess Grameen and other finance companies went up after the Reserve Bank of India (RBI) made a new rule. Before, banks had to keep extra money aside when giving loans to finance companies (NBFCs), but now they don’t have to keep as much. This will help NBFCs get money more easily and at lower costs. Because of this, stocks of CreditAccess Grameen, Five-Star Business Finance, and L&T Finance went up by 15%. This will help companies like Bajaj Finance, Shriram Finance, and Mahindra Finance borrow money at cheaper rates and make more profit. Big finance firms like Morgan Stanley and Nomura say this change will help NBFCs grow, make investors happy, and bring more money into the microfinance industry.
Potentials:
In the next five years, CreditAccess Grameen wants to grow bigger and give more loans. It plans to grow 20-25% every year and reach Rs 50,000 crore in total loans. The company sees many chances to grow, especially in villages. Even though borrowing money has become more expensive, CreditAccess Grameen has kept its costs low, which is a big success. It gives loans to small workers, not big farmers, so farm loan waivers do not affect it. The government and RBI support small loans, which helps the company grow even more.
Analyst Insights:
Market capitalisation: ₹ 15,455 Cr.
Current Price: ₹ 968
52-Week High/Low:₹ 1,553 / 750
P/E Ratio: 17.5
Dividend Yield: 0.96 %
Return on Capital Employed (ROCE): 14.8 %
Return on Equity (ROE): 24.8 %
CreditAccess Grameen is a big company that gives small loans to people, mostly in villages. The company is growing well, making more money every year. It is worth ₹15,455 Cr, and the stock price is ₹968. In the last five years, its profits grew 35% every year, and its sales grew 31.6% over the last 10 years. This shows the company is doing well. But there are some risks. The company has to pay interest on its loans, and right now, it does not have a lot of extra money to cover those payments if costs go up. Also, the people who started the company (promoters) own less of it now than they did three years ago, which may worry some investors. The stock is not too expensive compared to how much the company earns (P/E ratio is 17.5). It also uses its money well, with returns of 14.8% on capital and 24.8% on equity. The company pays a small dividend (0.96%), which means it mostly keeps its money to grow. Overall, the company is strong and growing, but investors should watch its debt and promoter holdings. Right now, it may be best to hold the stock and see how it performs in the future.