Shares of CreditAccess Grameen Ltd, an NBFC registered with the Reserve Bank of India (RBI), shed 6 percent after block deals took place on the counter. The company’s share price reached an intraday low of ₹ 1,244.95 apiece on the National Stock Exchange (NSE).
Reports suggest that the company’s share price tumbled as its promoter CreditAccess India BV was looking to sell a stake in the microfinance lender. Shares worth around ₹ 1,100 crores were being sold in a price range of ₹ 1,230-₹ 1,255 apiece. However, this represents a discount of nearly 7.2 percent as compared to the scrip’s closing price of ₹ 1325.70 apiece. The promoter held a 73.68 percent stake in the company and its stake will reduce to ₹ 67.88 percent after the deal.
The Bengaluru-headquartered company provides 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 its members. CreditAccess Grameen operates in 352 districts in 14 states.
With a market capitalization of ₹ 21,609 crores, CreditAccess Grameen is a mid-cap company. It has an ideal return on equity of 17.81 percent. The company’s shares were trading at a price-to-earnings ratio (P/E) of 25.55, which is higher than the industry P/E of 19.97, suggesting that the stock might be overvalued as compared to its peers. It could also mean that investors are willing to pay a higher price for the company’s future earnings.
The company’s share price gained nearly 12 percent in the past ten sessions before it shed some gains on Friday’s sessions. It recently signed a $200-million external commercial borrowing (ECB) agreement, hailed as a milestone. This was the first social ECB loan in the microfinance industry in the country and the fourth to originate from India.
CreditAccess Grameen is one of the largest microfinance companies in India in terms of its loan book, with assets under management (AUM) amounting to ₹16,540 crore as of September. The company recently unveiled its plan to have 500 billion worth of assets, reflecting a 20-25 percent CAGR (Compounded Annual Growth Rate) over the next four-five years, from ₹ 200 billion in March.
Written By Simran Bafna
