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