ICICI Securities: CreditAccess Grameen - Well Poised Not Only To Navigate The Cycle But Enhance Its Market Positioning

BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..ICICI Securities Report.Incrementally, collection efficiency, disbursements for August and adequate liquidity buffer suggest CreditAccess Grameen Ltd. to be well poised to navigate the cycle better than peers.Collection efficiency sustained its improving trajectory in August 2020—standalone collections at 82% (approximately 86% excluding Maharashtra), up from 74%/76% in June/July 2020 and Madura Micro Finance Ltd.’s collections increasing to 75% versus 54% / 64% in June/July 2020.Borrowers making full payments at 72% versus 67%/64% in June/July 2020 for CreditAccess Grameen lend confidence on recovery efforts.For Madura Micro Finance, borrowers paying fully remained lower at 27%, but we rest our hope with the pace of customer activation at 87% (85% for CreditAccess Grameen) versus 60% / 78% in June/July 2020.Collections in Maharashtra (72%) and Odisha (63%) lagged overall collections in August 2020.While approximately 15%/13% inactive customer base for CreditAccess Grameen/Madura Micro Finance poses near-term risk on asset quality, its customer centric business model, weekly collections and adequate provisioning buffer (210 basis points at consolidated level) improves visibility on earnings sustenance.Also, confidence of return on asset/return on equity trajectory of more 4%/18% in FY22E warrants higher price to book multiple of 3.2 times FY22 book..Click on the attachment to read the full report:.DISCLAIMERThis report is authored by an external party. BloombergQuint does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the brokerage and do not represent the views of BloombergQuint..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

ICICI Securities: CreditAccess Grameen - Well Poised Not Only To Navigate The Cycle But Enhance Its Market Positioning

That 15% of CreditAccess Grameen’s customer base is inactive poses a risk to the microfinance firm’s asset quality.

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