Indian shadow lender CreditAccess Grameen profits from loan recovery

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Shares of India’s Largest Non-Bank Shadow Lender CreditAccess Grameen rose on Wednesday, a day after brokerage firm Axis Securities raised its price forecast for the company’s shares following a positive trade update.

CreditAccess Grameen shares ended up 2.8% at INR 698.55 (US $ 9.49) on the National Stock Exchange, after Axis Securities maintained its buy recommendation for the institution’s shares microfinance fund, with a revised target price of INR 745.

The revision followed a commercial update, released this weekend, which showed CreditAccess loan disbursements for August 2021 have returned to pre-pandemic levels.

The finance provider to small retailers has a market capitalization of approximately INR 108.78 billion.

The analyst’s point of view

Advances to clients, which resumed in July 2021 after the nationwide phased unlock, continued to grow in August 2021. “We expect the same to be true,” Axis Securities said in its September 6 customer note.

“The moderate growth of the subsidiary Madura Microfinance, as well as the deterioration in asset quality trends, remain a source of concern,” Axis analyst Dnyanada Vaidya wrote in the note.

“However, drawing on the experience of tackling the stress of Covid 1.0, we remain confident in CreditAccess’s robust business model and management’s proactive approach to identifying and accounting for stress,” he said. -she adds.

Loan zooms

In his September 5 regulatory filing, the home improvement loan provider said disbursements in August increased 200% year-on-year to INR 11.88 billion. Loans in August were also 7.3% higher than the July 2021 figure of INR 11.07 billion. Meanwhile, collections have also improved.

CreditAccess Grameen, which operates more than 1,400 branches across the subcontinent, also sells life insurance to clients and their co-borrowers.

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