Shares of this NBFC Soared by 19 per cent After RBI Notification; Earlier the this Micro Finance Organisation Secured USD 50 Million IFC Investment
With a market capitalisation of Rs 15,623 crore and a PE ratio of 17.7x, the company trades at a premium compared to the industry PE of 20.1x.
CreditAccess Grameen Ltd shares surged by 19 per cent to intraday high of Rs 1,031 in Thursday’s trade following the RBI's notification on risk weights for microfinance loans. The central bank stated that microfinance loans in the nature of consumer credit would be risk-weighted at 100 per cent, and the risk weights applicable to NBFCs rated A and above would be restored to pre-November 2023 levels. This development is expected to normalize banking credit growth to NBFCs, which had declined from 22.1 per cent YoY in October 2023 to 6.6 per cent YoY by December 2024.
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Earlier, CreditAccess Grameen has received approval for a USD 50 million investment from the International Finance Corporation (IFC) to support microentrepreneurs in agriculture and related sectors.
This funding aims to enhance CreditAccess Grameen’s asset liability management (ALM) with flexible repayment options and geographical diversification to manage market risks. IFC’s investment will expand access to credit, particularly for women engaged in agriculture, potentially reaching an additional 3-4 million borrowers throughout the project’s duration.
India’s micro, small, and medium enterprises (MSMEs) play a key role in economic growth but face significant financing challenges, with an estimated USD 333 billion funding gap - 95 per cent of which impacts micro and small enterprises. This investment seeks to address these gaps by improving credit availability, strengthening financial inclusion, and driving economic development. Additionally, IFC will support CreditAccess Grameen in diversifying its funding sources and securing long-term financing.
About the Company
CreditAccess Grameen Limited is registered as a non-deposit accepting NBFC - Microfinance Institution with the RBI. It is engaged in providing microfinance services to women who are enrolled as members and organized as Joint Liability Groups. It also uses its distribution channel to provide certain other financial products and services to the members.
With a market capitalisation of Rs 15,623 crore and a PE ratio of 17.7x, the company trades at a premium compared to the industry PE of 20.1x. Investors should keep an eye on this Mid-Cap stock.
Disclaimer: The article is for informational purposes only and not investment advice.