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ICICI Securities Report
CreditAccess Grameen Ltd.'s Q1 FY21 result is characterised by strong core operating performance (standalone pre-provision operating profit up 37% YoY), focus on strengthening balance sheet (contingency buffer of approximately 2.2% of consolidated asset under management) and cautious approach towards growing balance sheet (to our liking fresh disbursements fell 98% YoY/QoQ).
Further, July 2020 collection efficiency at 76%, of which approximately 64% customers are paying fully, reflects its strong business resilience and strategically collected interest on moratorium (April/May 2020) along with June 2020 collections to eliminate imminent risk of collection disruption in case of higher equated monthly installments due to moratorium.
Though the merger brings in synergy, non-paying customers at 17% and Madura Micro Finance Ltd.'s lower collection poses near-term risk.
However, strong execution track record, weekly collection model, improving customer activation rate and ability to raise funds at competitive rates, would ensure CreditAccess Grameen emerging stronger in post Covid-19 era.
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