The company is a leading Indian micro-finance institution headquartered in Bangalore, focused on providing micro-loans to women customers predominantly in Rural Areas in India.
CreditAccess Grameen IPO Review by Anil Singhavi
The company’s focus customer segment is women having an annual household income of Rs 160,000 or less in urban areas and Rs 100,000 or less in rural areas. The company’s promoter is CreditAccess Asia, a multinational company specialising in MSE financing (micro and small enterprise financing), which is backed by institutional investors and has micro-lending experience through its subsidiaries in four countries in Asia.
Issue date: Aug 8-10
Price band: Rs 418-422 per share
Bid lot: 35 and in multiple thereof
Face value: Rs 10 per share
Listing: BSE, NSE
Offer for sale: 11,876,485 equity shares
Fresh Issue: Rs 630 crore
Pre-Issue equity shares: 12.84 crore
BRLM: ICICI Securities, Credit Suisse Securities, IIFL Holdings, Kotak Mahindra Capital
Registrar: Karvy Computershare
Strong growth in financials
The company has shown strong CAGR growth in its financials with topline of company registering at whopping CAGR of 57% from FY14 to FY18 while bottomline of company has risen by CAGR of 65% during the same years.
Its gross AUM during the same period has increased by CAGR of 57% & disbursements of company has registered CAGR of 55% from FY14 to FY18.
One of the best industry ratios
The company had a high Active Customer Retention Rate of 90% (annualized) for the six months ended September 30, 2017, compared with the median Active Customer Retention Rate of 15 leading micro-finance players which stood at 78% for the six months ended September 30, 2017.
Based on the data as per MFIN, CreditAccess Grameen has the second lowest average interest rates with 22% as of Q2FY18 & had the lowest opex ratio amongst top 8 NBFC-MFIs and SFBs.
Its cost-to-income ratio at 38.35% in FY18 is very attractive which has declined significantly from 59.61% in FY14. Also , CreditAccess Grameen had the lowest average ticket size of Rs 10,887, which is much below the industry average of Rs 20,034, as of March 31, 2017.
The lower ticket size can be attributed to its high focus on rural areas with 82% of branches being located in rural areas.
The company is bringing the issue at P/B multiple of 2.94 on post issue book value at higher end of price band of Rs 418-422 a share.
Although the company has shown strong growth with CAGR of more than 50 per cent from FY14 to FY18 in its financials added by solid fundamentals as some of the company’s ratios are one of the best in industry but low ROE which will dilute post-listing is a concern.
Hence, we rated issue a “Subscribe” one with limited upside potential.