Shares of CreditAccess Grameen surged nearly 9 percent on Wednesday after the non-banking lender reported very strong results for the quarter ended March 2023 (Q4FY23). The stock rose as much as 8.7 percent to its day's high of ₹1,183.
The firm posted an 86.4 percent jump in its net profit at ₹296.6 crore in Q4FY23 versus ₹159 crore in the year-ago period. Its net interest income (NII) for the quarter under review also rose 30 percent to ₹719.8 crore from ₹554.7 crore in the corresponding period last fiscal.
The total income for the firm advanced 29 percent to ₹1,066.2 crore in Q4FY23 versus ₹824.5 crore in Q4FY22 and pre-provision operating profit (PPOP) jumped 36.3 percent to ₹502.9 crore from ₹368.8 crore last year.
Further, the lender's gross loan portfolio also rose 27 percent to ₹21,031 crore in Q4FY23 and its asset quality also improved to 1.21 percent in the quarter under review versus 3.61 percent a year back. Meanwhile, net NPA came in at 0.42 percent in Q4FY23 against 1.28 percent in Q4FY22.
Udaya Kumar Hebbar, MD and CEO of CreditAccess Grameen, said, the company became the first pure-play microfinance institution in the country to cross the ₹20,000 crore assets under management (AUM) mark. He added that the company added nearly 12.3 lakh new borrowers in FY23, taking the total borrower base to 42.64 lakh.
Going ahead, Hebbar expects a 24-25 percent growth in the gross loan portfolio and a net interest margin of 12-12.2 percent.
Meanwhile, for the full financial year FY23, the company’s net profit surged 134 percent to ₹826.1 crore as against ₹353.1 crore in FY22. Its total income also advanced 29 percent to ₹3,550.8 crore in FY23 from ₹2,750.1 crore in FY22.
On the back of the strong results, brokerage house Equirus Securities retained its 'long' rating and raised its target price to ₹1,385 from ₹1,350 earlier, indicating a potential upside of 28 percent.
The brokerage noted that CreditAccess posted strong results on the back of improving margins, a rationalizing opex, and moderating credit costs.
"CREDAG beat its own FY23 loan guidance of 25 percent YoY by delivering a 27 percent Yoy loan growth; this was led by active customer addition and healthy customer retention (88 percent). With a strategy to focus on newer non-core states for growth, the company added 1.23 mn customers in FY23, of which 45.6 percent were from non-top-3 states. Also, of the 59 net branches added, 55 were in non-top-3 states. The ticket size increased to ₹51.5k (+9.5 percent yoy) driven by increasing customer vintage; it is further likely to increase by 9-10 percent ahead," said the brokerage.
It further added that while CREDAG’s pricing is not the highest among MFIs, Equirus believes NIMs would improve in FY24. It also expects opex/AAUM of 4.6 percent despite continuous branch addition plans. In terms of credit costs, management guidance was at 1.6-1.8 percent and the brokerage sees ROA/ROE for FY24E to be 4.8 percent/20 percent.
