However, the bigger takeaway is the fact that the brokerage has cut its price target on the stock by 60% to ₹564 from ₹1,426 earlier.
Goldman Sachs believes that the earnings visibility for the company is clouded amidst asset quality concerns and that the de-rating for the stock is structural in nature.
Between the fourth quarter of financial year 2024 and the September quarter of financial year 2025, CreditAccess Grameen’s gross NPA increased by 97.6%, while its net NPA more than doubled, increasing by 107.5%. On the flip side, the company’s assets under management declined by 5.9%.
For the September quarter, CreditAccess Grameen’s Gross NPA stood at 2.44% from 1.46% in June, while its net NPA stood at 0.76% from 0.45% in the September quarter.
The accelerating decline in CreditAccess Grameen’s asset quality for the September-ended quarter has surprised Goldman Sachs negatively, the brokerage wrote in the note.
With new guidelines being put in place for the MFI segment, Goldman Sachs expects CreditAccess Grameen’s asset quality deterioration to accelerate.
As a result, the brokerage has cut CreditAccess Grameen’s Earnings Per Share (EPS) estimates by 40% and 51% respectively for financial year 2025 – 2027. It expects credit costs for the company to be at 6.6% for the current financial year and at 4.5% for the next.
Goldman Sachs also expects slower loan growth due to higher write-offs in the fourth quarter and in financial year 2026 as per the company’s policy of 270 days write-offs. It added that the current valuations do not adequately reflect the underlying stress in the portfolio.
CNBCTV18 was the first one, to highlight the pain in rural economy / microfinance sector on May 25, 2024. Since then, lenders focused in microfinance loans, have given negative returns, ranging from 28% to 60% compared to a positive 5.4% return on Nifty during the same period.
Out of the 19 analysts that have coverage on CreditAccess Grameen, 14 of them still have a “buy” rating, three of them say “hold”, while two have a “sell” rating.
Shares of CreditAccess Grameen ended 0.3% lower on Thursday at ₹980.05. The stock is down 45% from its recent peak of ₹1,796.
