The share price of this Microfinance company was down by around 6.8 percent on Monday due to weak results.
Share Price Movement
In Monday’s trading session, CreditAccess Grameen Ltd’s share price was down by 6.8 percent trading at Rs. 915 per share from the previous close of Rs.982.4 per share. The share price in the past year has given negative returns of 42 percent and over the past 5 years, it has given around 44.21 percent returns.
Q2FY25 Results
The decrease in the stock price was driven by the weak results in net interest income and net profits reported by CreditAccess Grameen Ltd for the recent quarter.
In its latest filing for the quarter ending September 2024, the company reported a 20.77 percent increase in net interest income, reaching Rs.932.4 crore compared to Rs.772 crore in Q2 FY24. On a quarter-over-quarter basis, the operational revenue fell by 2.11 percent from Rs.952.5 crore in Q1FY25.
During the same period, net profit declined by 46.36 percent to Rs.186.1 crore in Q2 FY25, compared to Rs.347 crore in Q2 FY24, and fell by 53.20 percent from Rs.397.7 crore in Q1 FY25.
Regarding return ratios, the return on equity (ROE) is at 24.8 percent. The stock is trading at a P/E (Price to Earnings) ratio of around 11, which is lower than the industry average of 23.13. The company also has a Net Interest Margin of 13.5 percent as of Q2FY25, Cost to Cost-to-income of 30.70 percent.
Their Return on Assets is around 2.70 percent in the recent quarter which is below their guidance of FY25. The impairment of financial instruments increased by 338.30 percent YoY in this quarter and the GNPA increased to 2.44 percent from 0.77 percent in Q2FY24. NNPA stood at 0.76% in Q2FY25 as compared to 0.24% in Q2FY24
The gross loan portfolio indicated an 11.80 percent YoY increase and Borrowers increased by 7.2 percent in the same period whereas disbursements fell by 19.40 percent. Provisioning stood at 3.53% and there was a write-off of Rs.135 crores this quarter.
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Management Commentary
Managing Director of CreditAccess Grameen Udaya Kumar Hebbar said “Given the short-term nature of microfinance loans and the industry’s timely adjustments, we view the credit cycle as temporary. In light of the current landscape, we have updated our FY25 performance estimates, projecting loan portfolio growth between 8-12 percent, a net interest margin of 12.8-13.0 percent, and a credit cost of 4.5-5.0 percent.”
Company Profile
CreditAccess Grameen Limited (CA Grameen) is an Indian microfinance institution based in Bengaluru. It primarily provides microloans to women in rural areas, empowering low-income households. Established in 1999, CA Grameen operates across 388 districts and has nearly 2,000 branches, focusing on community-based lending through Joint Liability Groups.
Written by – Santhosh
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