ICICI Securities

CreditAccess Grameen (Buy)

Target: ₹605

CMP: ₹598.2

CreditAccess Grameen’s journey from being a project under T Muniswamappa Trust (TMT) in 1999, an NGO in South Bengaluru, to becoming the largest NBFC-MFI in India as on September 2021 with consolidated AUM of ₹13,300 crore and borrower base of 3.75 million is testimony of its resilient business model. It has been successfully navigating many challenging events like AP crisis, demonetisation and two Covid waves.

All these years, CAGL has stuck to the basic fundamentals of the business like building strong/personalised relationships with customers, allocating sufficient training hours to the newly appointed staff before going on fields and incorporating an incentive structure aligned with the company’s DNA of intolerance toward any process lapses to chase growth and keeping customer interest & demand ahead of company’s personal interest.

In our view, after successfully navigating two Covid waves, CAGL is now geared up for the next phase of organisational journey, aiming at: diversifying revenue stream; gradually scaling up secured portfolio; and leveraging existing capabilities and strengths to diversify product and service offerings. CAGL has always believed in contiguous expansion rather than building a pan-India network in short term. Hence, its top-3 States (MH, TN & KTK) contribution still remains higher, which it intends to bring down by 2025.