CreditAccess Grameen shares may fall another 40% even after correcting 45% from peak, Goldman says

Shares of Microfinance player CreditAccess Grameen Ltd. are expected to see further downside of another 40%, brokerage firm Goldman Sachs wrote in a note on Wednesday, January 15.

The brokerage maintained a “sell” rating on the stock with a price target of ₹577. The price target implies a 40% downside from Tuesday’s closing levels.

Shares of CreditAccess Grameen have already corrected 45% from their peak of ₹1,736.

Goldman Sachs wrote in its note that with investors focusing on stabilizing collection efficiency reported by some lenders, it further analysed data to see if there are any signs of recovery in the microfinance industry. However, it did not find any encouraging signs yet.

Incremental data suggests that 37% of MFI borrowers with a retail overlap, meaning those who have both MFI and retail loans, are delinquent, with 30-plus Days Past Due (DPD), either on the Microfinance or Retail or both loans, as of September 2024. That represents at least $18 billion of retail loans and $10 billion in MFI loans, Goldman Sachs wrote.

It also noted that there has been an increase in slippages across retail products by 120 basis points since March 2024 to 4.3%.

Out of the 19 analysts that have coverage on CreditAccess Grameen, 14 of them have a “buy” rating, three say “hold”, while two have a “sell” recommendation on the stock. Consensus implies a potential upside of around 11% from current levels.

Shares of CreditAccess Grameen ended 4.9% higher on Monday at ₹960. The stock has gained 8% so far in January after five straight months of negative returns.