Shares of CreditAccess Grameen, a microfinance institution, started Wednesday's trade strongly after the company's December quarter numbers beat analyst estimates.
On Tuesday, the lender reported its highest-ever quarterly consolidated net profit of ₹217 crore for Q3, compared to a net profit of ₹117 crore in the year-ago quarter.
The company is delivering steady growth in its net profit, quarter after quarter. In the first two quarters of the current fiscal, it posted a net profit of ₹140 and ₹176 crore, respectively.
In Q3 FY23, the net interest income rose 37.62% to ₹567 crore as against ₹412 crore in a similar quarter of last year. Pre-provision operating profit (PPOP) increased by 38.7% YoY, from Rs. 273.5 crore to Rs. 379.5 crore in Q3 FY23.
The net interest margin during the reporting quarter stood at 11.9%, an expansion of 50 basis points from 11.4%.
Total income on a consolidated basis rose to ₹908 crore in the October-December quarter of FY23, as against ₹687 crore in the same period of the previous financial year.
On the asset quality side, the gross non-performing asset ratio of the lender stood at 1.71% in Q3 FY23, down from 6.02% in Q3 FY22, while the NNPAs came in at 0.59% in December quarter, a drop of 201 basis points YoY.
The company's share price has responded positively to the news, with the stock opening at ₹945 apiece, compared to the previous closing price of ₹901. The stock strengthened further to hit an intraday high of Rs. 988, up 9.65%.
The stock is currently trading near its all-time high of ₹1,154, which was set in May of last year. In CY22, the stock delivered an impressive return of 53.26 percent, climbing from ₹597.85 apiece to ₹915.
CreditAccess Grameen Limited is a leading Indian microfinance institution headquartered in Bengaluru, focused on providing micro-loans to women customers predominantly in rural areas across India. On a consolidated basis, the company is now operating in 344 districts around 14 states in India through 1,727 branches.
The stock, which got listed on the exchanges on August 23, 2018, is trading 127.48% higher than its IPO price of ₹422 apiece.
Meanwhile, the microfinancier is entering the secured lending side with home, auto, and gold loans along with SME funding, Udaya Kumar, the company's MD and CEO, told PTI.
Earlier, brokerage firm ICICI Securities maintained a "buy" call on the stock with a target price of ₹1,300 apiece. The brokerage said that the company is well positioned to maintain its leadership in the MFI space, as reflected in its incremental share in MFI lending at 8% vs. an outstanding market share of 6% as of September 22.
The company also laid out its goal to become the preferred financial partner for 10 million low-income households lacking access to credit by 2025, it added.
"A two-decade experience in handling various credit cycles in the MFI space has helped CA Grameen build a sustainable, scalable, and resilient business model. "Strong post-pandemic credit demand recovery and consistent asset quality improvement reinforce our view that the MFI space is set for a strong upcycle in the coming years," the brokerage said.
13 analysts polled by MintGenie on average have a 'strong buy' call on the stock.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.