Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  

| More

CreditAccess Grameen - Q4FY21 Result Update - ICICI Securities

Posted On: 2021-05-07 05:41:54 (Time Zone: UTC)

Precautionary provisions impacted earnings; current valuation captures near-term concerns

CreditAccess Grameen's (CAGL) Q4FY21 financial performance must be seen with respect to the management's precautionary stance - writing-off loans worth Rs2.8bn, recognising the entire restructuring pool of Rs0.7bn (0.7% of loans) as stage 3 & providing ~70% on that pool and creating covid buffer of ~Rs1.1bn (0.9% of loans) to cushion earnings from the adverse impact of the second wave. Collection continued to trend well, reaching 94% by March'21 from 91% in Dec'21; however, intermittent lockdowns/restrictions on movement in various states due to resurgence of covid cases may impact collections in Q1FY22. While we believe near term asset quality concern do persists, its precautionary measures in Q4FY21, strong capital position with CAR at 27% and adequate liquidity (~16.5% of total assets) will ensure RoA reviving to 3.4% by FY23. Maintain BUY with a revised target price of Rs765 (earlier: Rs850). Key risks - A) stress unfolding higher than anticipation due to the second wave and B) delay in growth recovery.

- Core performance in-line. CAGL delivered 13% YoY consolidated AuM growth and RoA of 1.8% adjusted for accelerated write-offs and additional covid buffer of Rs1.1bn created for FY22e. CAGL's disbursements in Q4FY21 were up 42% YoY driving 15% YoY AuM growth. Incremental disbursements in Q4FY21 were mostly towards IGL loans as reflected in its share increasing to 93% in March'21 from 85% in March'20. Average outstanding per borrower at ~Rs39,000 for CAGL appears higher, but considering unique borrower base at 40-43% not raising red flag. It continues to maintain higher liquidity of Rs24bn (~16.5% of assets) and declining marginal cost of borrowing reflects its ability to raise funds at competitive rates. Further, CAR at 27% will help it navigate challenging times better than peers.

- Collections and recovery remained on track in Q4FY21, but second wave to impact Q1FY22e collections. CAGL's collection (94% ex-arrears) as of March'21 is in-line with the management anticipation with PAR excluding Maharashtra (~4%) reaching near normalcy. Even in Maharashtra, PAR 0 fell from 19% in Dec'20 to 8.7% in March'21. Similarly, collection trend in MMFL's portfolio is also in-line with the expectation at 90% in March'21. However, resurgence of covid cases poses risk of lower collections in Q1FY22 and taking cognisance of the same, the management accelerated write-offs and build provision buffer to cushion FY22e earnings.

- Precautionary provision in Q4FY21 to cushion FY22e earnings. Management has conservatively up-fronted stress recognition in Q4FY21 to the extent possible as reflected in its writing-off of Rs2.8bn worth of loans, classifying restructured asset as stage 3 & providing 70% for the same and additionally creating Rs1.1bn of covid-2 buffer. Its prudent measures may help it cushion FY22e earnings to some extent. To factor in likely lower collection in Q1FY22, we increase our credit cost assumption for FY22e to 3% and accordingly cut our earnings estimates by ~35%/23% for FY22/23, respectively.

Shares of CreditAccess Grameen Ltd was last trading in BSE at Rs.608 as compared to the previous close of Rs. 600.7. The total number of shares traded during the day was 7420 in over 721 trades.

The stock hit an intraday high of Rs. 622 and intraday low of 601. The net turnover during the day was Rs. 4561244.

Source: Equity Bulls

Click here to send ur comments or to

Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only., its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.

Other Headlines:

KEC International: Company Update - Building on diversification - HDFC Securities

LIC Housing Finance - Q4 FY21 Result Update - YES Securities

Entertainment Network Ltd - Beating on solutions business - ICICI Securities

Asahi India Glass - Operating leverage, product mix aid margins - ICICI Securities

Whirlpool of India - Market leading revenue growth - ICICI Securities

Lemon Tree Hotels - Wait for recovery gets longer - ICICI Securities

LIC Housing Finance - Stupendous growth momentum; needs to shore up provisioning and capital buffer - ICICI Securities

Quant Pick - Bank of Baroda - ICICI Direct

Company Update - Amara Raja Batteries - Investor Event Outcome - ICICI Direct

Q4FY21 Result Update - Bhel - ICICI Direct

Q4FY21 Company Update - NRB Bearings - ICICI Direct

CESC - Q4FY21 First Cut - ICICI Direct

Q4FY21 Result Update - Entertainment Network India - ICICI Direct

LIC Housing Finance Results Review Report - Balance sheet beefs up; P&L to stay soft - HDFC Securities

Jubilant FoodWorks 4QFY21 Results Review Report - Missing excitement; recovery priced in - HDFC Securities

BFSI Sector Update - MFI Consultation Paper Takeaways - Incrementally positive for NBFC-MFIs - HDFC Securities

Q4FY21 Result Update - JK Cement - ICICI Direct

Q4FY21 Result Update - Minda Industries - ICICI Direct

Stock Tales - Indo Count Industries - ICICI Direct

IPO Review - Krishna Institute of Medical Sciences Ltd - ICICI Direct

Q4FY21 Company Update - Greenply Industries - ICICI Direct

IPO Review - Dodla Dairy Ltd - ICICI Direct

Lemon Tree Hotels - Q4FY21 First Cut - ICICI Direct

Jubilant Foodworks - Q4FY21 investor call takeaways - YES Securities

Greenply Industries Ltd - Q4 FY21 Result Update - YES Securities

Whirlpool of India Ltd - Q4 FY21 Result Update - YES Securities

New India Assurance Report - CoRs disappoint yet again - HDFC Securities

Maintain BUY on Kajaria Ceramics - Performance shines through; outlook bright - HDFC Securities

Retain ADD on Deccan Cement - Volume strong; high other expense dents margin - HDFC Securities

Reiterate ADD on NHPC - Lower generation impacts earnings - HDFC Securities

Maintain BUY on JK Cement - Robust volume and utilisation - HDFC Securities

Maintain BUY on DLF - Gaining traction - HDFC Securities

Maintain BUY on Capacite Infraprojects - Marginal miss - HDFC Securities

DLF Ltd - Q4 FY21 Result Update - YES Securities

Greenply Industries Ltd - Q4FY21 first cut - YES Securities

Coal India - Coal makes a comeback - ICICI Securities

Kajaria Ceramics - Q4FY21 beat largely priced in - ICICI Securities

JK Cement - Expansion to drive volume growth - ICICI Securities

Info Edge India - Concerns around Zomato's gig work unwarranted - ICICI Securities

Bharat Heavy Electricals - Higher provisioning impacts margins - ICICI Securities

Mahindra Lifespace Developers - Well poised for growth; initiate with BUY - ICICI Securities

Kajaria Ceramics - Q4FY21 First Cut - ICICI Direct

Gladiator Stocks - Tata Metaliks - ICICI Direct

Q4FY21 Result Update - Gail (India) - ICICI Direct

Q4FY21 Result Update - Engineers India - ICICI Direct

IPO Review - Shyam Metalics & Energy Ltd - ICICI Direct

Coal India - Q4FY21 First Cut - ICICI Direct

Capacite Infraprojects - Q4 FY21 results first cut: Robust performance - YES Securities

Cochin Shipyard - Q4 FY21 results first cut: Strong performance - YES Securities

CARE Ratings - Q4 FY21 results first cut: Stellar Performance - YES Securities

Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2020