Shares of Microfinance player CreditAccess Grameen Ltd. are trading with gains of 5% on Wednesday, July 23, despite continued weak profitability due to subdued growth and ongoing asset quality stress in its microfinance (MFI) portfolio, which led to a higher credit costs.CreditAccess reported a net profit of ₹60 crore in Q1FY26, which was up 27% sequentially but down 85% year-on-year, primarily due to a decline in credit costs.
Management expects credit costs to remain elevated in Q2, but stabilise to 3-3.5% in the second half of FY26.
Full-year FY26 growth and return on equity (RoE) guidance was maintained at 14-18% and 11.8-13.3%, respectively, with a huge contribution expected from H2FY26, particularly from the retail finance book.While the MFI segment is not yet fully out of the woods, CreditAccess is expected to be among the first to recover from the current stress cycle, thanks to its proactive stress recognition (stage 2 at 30 days past due and stage 3 at 60 dpd in MFI), accelerated write-off policy, and robust ECL coverage (55%/65% for stage 2/3 loans), according to JM Financial.
Management expects credit costs to remain elevated in Q2, but stabilise to 3-3.5% in the second half of FY26.
Full-year FY26 growth and return on equity (RoE) guidance was maintained at 14-18% and 11.8-13.3%, respectively, with a huge contribution expected from H2FY26, particularly from the retail finance book.While the MFI segment is not yet fully out of the woods, CreditAccess is expected to be among the first to recover from the current stress cycle, thanks to its proactive stress recognition (stage 2 at 30 days past due and stage 3 at 60 dpd in MFI), accelerated write-off policy, and robust ECL coverage (55%/65% for stage 2/3 loans), according to JM Financial.
Given the improving outlook, JM Financial has upgraded the stock to ‘Buy’ and raised its price target to ₹1,475 from ₹1,135.The brokerage estimates 15% AUM CAGR over FY25-27E and an average RoE of 15% during FY26-27E.
Meanwhile, Emkay Global has retained an ‘Add’ rating with an unchanged price target of ₹1,350, citing the company’s strong track record, robust capital buffers, and superior management compared to peers.
The stock is currently trading at 2.5 times its estimated FY27 book value, which is in line with its long-term average.
Out of 18 analysts covering CreditAccess Grameen, 13 have a ‘Buy’ rating, two ‘Hold’, and three ‘Sell’.
As of now, shares are trading 4.57% higher at ₹1,338.20, having surged nearly 50% year-to-date in 2025.
