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CreditAccess Grameen Q1 Review - Prudent Provisioning Impacted Earnings: ICICI Securities

CreditAccess Grameen Q1 Review - Prudent Provisioning Impacted Earnings: ICICI Securities

<div class="paragraphs"><p>A man holds a two thousand Indian rupee banknote and a five hundred banknote. (Photographer: Dhiraj Singh/Bloomberg)</p></div>
A man holds a two thousand Indian rupee banknote and a five hundred banknote. (Photographer: Dhiraj Singh/Bloomberg)

BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

ICICI Securities Report

CreditAccess Grameen Ltd.’s Q1 FY22 standalone financial performance must be seen with respect to the management’s precautionary stance, viz. writing-off loans worth Rs 0.5 billion, provisioning ~75% on 90 plus non-paying customer pool of 4%, and still carrying Rs 1.44 billion provision buffer to cushion earnings from any further adverse impact due to Covid-19.

While collections were down in May 2021 and June 2021 at 79% and 84% respectively, it improved sharply in July 2021 crossing 90%.

Disbursements fell 78% QoQ to Rs 10.6 billion during Q1 FY22 due to lockdown, but revived sharply to Rs 12.6 billion in July-21.

While near-term asset quality concerns do persist, we believe CreditAccess Grameen’s precautionary measures in Q1 FY22, strong capital position with capital adequacy ratio at 27%, and adequate liquidity, would ensure return on asset reviving to 3.4% by FY23E.

Click on the attachment to read the full report:

ICICI Securities CreditAccess Grameen Q1FY22 Results Update.pdf

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