Mehabe score: 5 G Factor: 4 Piotski Score: 4 The stock has a rating OBSERVE & HOLD. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 4 and Piotski score of 4.
Description
CreditAccess Grameen is engaged primarily in providing micro finance services to women who are enrolled as members and organized as Joint Liability Groups (JLG). In addition to the core business of providing microcredit, the Company uses its distribution channel to provide certain other financial products and services to the members.(Source : 202003-01 Annual Report Page No:121)Site:CREDITACCMain Symbol:CREDITACC
Stock trades at 730.0, above its 50dma 695.56. It also trades above its 200dma 675.87. The stock remains bullish on techicals
The 52 week high is at 839.95 and the 52week low is at 498.05
Price Chart
P/E Chart
Sales and Margin
Strengths
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Weakness
– Stock is trading at 3.13 times its book value
-Though the company is reporting repeated profits, it is not paying out dividend
– has low interest coverage ratio.
– has a low return on equity of 10.46% for last 3 years.
Competition
– The industry trades at a mean P/E of 24.5x. SBI Cards trades at the industry’s max P/E of 93.15x. CREDITACC trades at a P/E of 79.8x
– Industry’s mean G-Factor is 4.5 while the mean Piotski score is 6.0. CREDITACC has a G-Factor of 4 and Piotski scoreof 4.
– Average 1 month return for industry is -0.6%. The max 1- month return was given by Bajaj Finserv: a return of 7.18 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 607.0 cr compared to Rs 461.0 cr for period ended Mar 2020, a rise of 31.7%
Operating Profits reported at Rs 317.0 cr for period ended Mar 2021 vis-vis 259.0 for period ended Mar 2020 .
Operating Margins contracted -395.8 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs 4.65 compared to Rs -4.61 for previous quarter ended Dec 2020 and Rs 1.58 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 2028.0 cr for period ended Mar 2021 vis-vis sales of Rs 1683.0 cr for the period ended Mar 2020, a healthy growth of 17.0%. The 3 year sales cagr stood at 32.5%.
Operating margins shrank to 214.0% for period ended Mar 2021 vis-vis 470.0% for period ended Mar 2020, contraction of 25600.0 bps.
Net Profit reported at Rs 142.0 cr for period ended Mar 2021 vis-vis sales of Rs 328.0 cr for the period ended Mar 2020, falling 131.0%.
Company reported a poor Net Profit CAGR of -12.5% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities: Rs -364.0 cr for period ended Mar 2021 vis-vis Rs -2276.0 cr for period ended Mar 2020
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has worsened on its Return on Equity (RoE) metric. The RoE on Last Year basis was 5.0% compared to 10.0% over the last 3 Years. – The stock has given a return of 21% on a 1 Year basis vis-vis a return of % over the last 3 Years. – The compounded sales growth on a TTM bassis is 20% vis-vis a compounded sales growth of 33% over the last 3 Years. – The compounded profit growth on a TTM basis is -57% vis-vis a compounded profit growth of -12% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 10.08% vis-vis 10.14% for Mar 2021 – Public shareholding has remained largely constant. The Jun 2021 public holding stood at 6.67% vis-vis 6.86% for Mar 2021
Conclusion
– – Stock is trading at 3.13 times its book value
-Though the company is reporting repeated profits, it is not paying out dividend
– has low interest coverage ratio.
– has a low return on equity of 10.46% for last 3 years.
Fundamentally, the stock remains weak on business fundamentals. Weak near term results have dampened and questioned business drivers. We suggest to wait for a upturn in business performance.
Technically, the stock trades above its 50 DMA 695.56 and is trading at 730.0 It has shown near term bullish momentum contrary to business fundamentals. We suggest to observe price action. However as investors, who like to avoid timing the markets, we suggest to avoid the stock
