CLSA has upgraded its rating on CreditAccess Grameen Ltd. to buy with a target price of ₹1,450 per share, driven by a sharp improvement in asset quality trends within the company’s core microfinance portfolio.
The brokerage highlighted that delinquencies and stress indicators have eased meaningfully, signalling stabilisation in the core MFI book. This improvement has strengthened CLSA’s confidence in the sustainability of earnings recovery over the coming quarters.
CLSA also expects non-MFI businesses to contribute more than 15% of the loan mix in FY26, which could help diversify risk and reduce dependence on the traditional microfinance segment. The brokerage believes this gradual shift in portfolio composition should improve the overall risk profile of the lender.
Management is expected to provide greater clarity on a redesigned business model and long-term strategy in the next quarter, which CLSA sees as a potential catalyst for further re-rating.
Overall, the brokerage believes the worst of asset quality pressures are behind the company, and the improving operating environment supports its upgraded stance.
Disclaimer: The views and recommendations above are those of CLSA. Business Upturn does not endorse them. Please consult a financial advisor before making investment decisions.