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CreditAccess Grameen recently announced its performance for the quarter ended September 30, 2021. Following are the key highlights.

Key Highlights of Q2FY22 Results

* Gross NPA (@ 60 +Days Per Due(dpd)) stood at 7.67% as compared to 7.56% in the last quarter. Collection efficiency for the standalone (excl arrears) improved from 87% on Q1FY22 to 94.3% in October-21, due to relaxation of lock-down rules, resulting in the better collection. The company expects the collection to improve even further, provided there is no 3 rd Covid wave. While most of the states are in recovery mode in terms of collection, Maharashtra is behind, as South Maharashtra was impacted severely on account of floods and Covid in the last 2 years. Provisions for the quarter were at Rs.139.9 cr as compared to Rs.187.9 cr in Q1FY22. Credit cost was higher by Rs 13.4 cr owing to a shift in the NPA recognition to 60+ dpd (vs. earlier policy of 90dpd) for MMFL. Management expects credit cost in FY22 to be in the range of 4.7-4.9% lower than ~6.6% in FY21.

* Consolidated gross loan portfolio increased by 19% yoy to Rs.13,333 cr. The consolidated customer base declined from 37.51 lakhs to 3.81 lakhs on yoy basis, primarily due to write-off. Disbursements are closer to pre-Covid levels at Rs.3,890 cr in Q2 FY22, a growth of 136% yoy. Management expects loan growth (~17-19% growth on yoy basis ) to be higher in FY22 than last year, considering 3 rd wave of Covid doesn’t happen.

* On the P&L front, NII went up by 11.2%/9.1% yoy/qoq at Rs.368.9 cr, with NIM at 11.2% during the quarter as compared to 10.2% in Q1FY22. Interest income derecognized in the quarter was Rs.20.6 cr, excluding this, NIM would have been 11.9%. Pre provision operating profit was Rs.218.7 cr, impairment on the financial instrument was Rs.139.9 cr, which includes the impact of write-off of Rs.130 cr. PAT fell by 25% yoy to Rs.59.7 cr in Q2FY22.

OUTLOOK AND VALUATION

We believe CAG is well placed to grow and capture a high market share on account of its strong capital base supported by strong parentage, focus on under-penetrated rural areas, and early stress recognition practice. We have a BUY rating with a revised target price of Rs.731 for 18-24 months.

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