FY25, A Year Of Consolidation For Microfinance Industry Says Axis Securities

NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Axis Securities Report.In the past decade, the microfinance industry has faced two black-swan events – Demonetization and Covid-19, causing notable turbulence. However, the MFI sector demonstrated remarkable resilience during both these crises through effective strategic responses. As compared to demonetization where the recovery for microfinanciers was comparatively faster, Covid-19 had a more disruptive and long-lasting impact on the businesses and livelihood of borrowers, and the growth and asset quality of microfinanciers. However, most microfinanciers bounced back strongly and reported a robust performance over FY23-24. This was led by buoyant demand-led growth which was largely steered by strong customer addition and multi-year low asset quality metrics. Despite Covid headwinds, the microfinance industry has grown at a healthy pace of 17% CAGR over FY20-24, with a sharp growth recovery over FY23-24, as the industry reported a robust 23% CAGR over FY22-24..Outlook: Backed by an improving mix of non-MFI products and growth gradually picking up pace post-nearterm headwinds, broadly steady NIMs and a controlled cost structure, we expect CreditAccess Grameen to deliver a GLP/net interest income/earnings growth of 23/23/21% CAGR over FY24-27E. We value CreditAccess Grameen at 2.4 times FY26E book value versus its current valuation of 1.9 times FY26E book value, to arrive at a revised target price of Rs 1,555/share, implying an upside of 31% from the current market price. We maintain our Buy recommendation on the stock, given that the risk-reward is favourable. Barring the near-term pain, we believe CreditAccess Grameen’s premium valuations are justified owing to its ability to deliver robust return ratios, adequate capitalisation and a strong management team..Click on the attachment to read the full report:.Financials Sector Check - Assessing Fee Income Pools For Banks: Motilal Oswal.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

FY25, A Year Of Consolidation For Microfinance Industry Says Axis Securities

Despite Covid headwinds, the MFI has grown at a healthy pace of 17% CAGR over FY20-24, with a sharp growth recovery over FY23-24, says the brokerage.

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FY25, A Year Of Consolidation For Microfinance Industry Says Axis Securities

Despite Covid headwinds, the MFI has grown at a healthy pace of 17% CAGR over FY20-24, with a sharp growth recovery over FY23-24, says the brokerage.

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