Brokerage firm Jefferies has said that CreditAccess Grameen could see growth and profitability improve in FY22 along with a 20-25 percent asset under management (AUM) growth in the medium term. Jefferies had hosted CreditAccess Grameen MD and CEO Udaya Kumar Hebbar at its India Midcap Summit held recently.

Share Market Live

NSE

Hebbar indicated that collections for the company were improving across geographies, and if lockdowns are implemented they would have limited impact unless they are prolonged. He added that COVID-related write-offs should be limited to 4-4.5 percent of loans, for which the company has made adequate provisions.

Jefferies said in a report that the management of India's largest Non-Banking Financial Company - Microfinance Institution (NBFC-MFI) expects business-as-usual (BAU) performance of the company to resume from the 2022 fiscal.

The management also indicated that any lockdown, going forward, will not have a material impact on the business momentum, unless it turns out to be prolonged.

Maharashtra, the second largest state for CreditAccess Grameen (25 percent of AUM) recently imposed restrictions and lockdowns in certain parts. The management indicated that collections in the state had improved in January and February, compared to December 2020.

While highlighting customer relationship, the management stated that 43 percent of Credag's customers borrowed exclusively from the company, while another 45 percent had borrowings from one other lender. "Moreover, Credag has a higher rural focus than the rest of the industry — 86 percent of its customers are from rural locations and 70 percent are employed in essential services," the report added.

The management expects industry AUM growth to sustain at 20-25 percent over the next 4-5 years, with similar growth trends for Credag. Currently, the company does not plan to apply for a small finance bank licence, as it wants to concentrate on its core microfinance business.

First Published:Mar 17, 2021 5:45 PM IST