CREDITACC - CreditAccess Grameen Ltd. Share Price

Management Outlook:
CreditAccess Grameen anticipates normalization of delinquency trends by Q4 FY25/Q1 FY26, driven by improved collections, reduced employee attrition, and stabilization in key markets. Growth is regaining focus, with AUM growth resuming in December 2024 after an 8-month contraction. Disbursements recovered to 90% of normal levels in January 2025, supported by new customer additions (42% New-to-Credit in Q3). Retail Finance (5% of AUM) grew 51% QoQ, reflecting diversification success.

FY25 Guidance:

• AUM growth: 7%-8%
• NIM: 12.8%-13.0%
• Credit cost: 6.7%-6.9%
• ROA: 2.3%-2.4%; ROE: 9.5%-10.0%

Preliminary FY26 Outlook:

• AUM growth: 18%-20%
• ROA: 4.2%-4.5%; ROE: 17%-19%

Major Points:

1. Asset Quality Improvement: PAR 15+ delinquency additions slowed from mid-November 2024. Collection efficiency (including arrears) reached 94.1% in Q3. Accelerated write-offs (INR 376 Crore in Q3) aim to absorb 80% of credit costs by Q1 FY26.
2. MFIN Guardrails Impact: Reduced exposure to high-risk cohorts (≥4 lenders: 23.6% of customers vs. 28.7% in Aug'24; >INR 2L unsecured debt: 11.6% vs. 16.7%). Retention of >80% paying customers in these cohorts expected.
3. Operational Resilience: Employee strength normalized, attrition below industry averages. Digital initiatives (MAHI app, Grameen Maitri) enhanced customer/employee engagement.
4. Funding & Liquidity: Raised INR 3,862 Crore in Q3; liquidity at INR 3,222 Crore (11.7% of assets). Capital adequacy at 25.9%.
5. Market-Specific Trends: Temporary stress in Tamil Nadu (cyclone impact) and Karnataka (local disruptions) resolving; collections improving. Retail Finance PAR 15+ at 7.0% vs. 6.0% for MFI-only borrowers.

Question: Sir, my question was firstly on this accelerated write-off during the quarter, so what was exactly the profile of these customers in terms of they being more than INR 2 Lakh ticket size or they being CreditAccess +3, CreditAccess +4, if you could just some color on that?
Answer: The accelerated write-offs targeted loans unpaid for 180+ days with no repayments for 90 days. These were primarily based on repayment behavior rather than specific borrower cohorts like ticket size or lender count. Detailed analysis was not shared during the call.

Question: The second question was on X bucket collection efficiency trend from Sep'24 to Jan'25, if you could provide that will be really helpful?
Answer: X-bucket collection efficiency improved from ~98.7% in October-November to 99.2% in December and sustained similar levels in January. Tamil Nadu saw temporary lagged effects from rains/cyclones but is normalizing.

Question: And sir, one last question was on the industry side, so with guardrail 2.0 being implemented from April 2025... how do you see things shaping up for us and for industry in FY26 in terms of trends on growth as well as on sustainable growth?
Answer: Guardrail 2.0's impact is expected to be minimal as 84% of affected borrowers are prompt payers. CA Grameen anticipates retaining >80% of these customers. Preliminary FY26 guidance projects 18%-20% AUM growth, 4.2%-4.5% ROA, and 17%-19% ROE.

Question: Mr. Ganesh, I didn't get the presentation... when can we expect a normal figure coming in maybe like what Q1 of next year or it might take more than that?
Answer: Delinquency normalization is expected between Q4 FY25 and Q1 FY26. Current trends show reversal from mid-November 2024, with disbursements reaching 90% of normal levels in January. AUM grew to INR 25,125 Cr by January 2025.

Question: Sir, my question is more around the business operations on the field. We had heard about loan officer attrition being high across MFI players... Where would we stand?
Answer: CA Grameen's loan officer attrition is below 50% (industry average) and stable. Over 3,000 ex-employees sought re-joining, ensuring sufficient workforce. Hiring processes remain unchanged, focusing on freshers with internal promotions for leadership roles.

Question: Sir, my question was on our guidance... what gives us that confidence to be so early in terms of guiding mostly a normalized year this is FY26?
Answer: Confidence stems from stabilized delinquency trends, improved collections (99.2% X-bucket efficiency), and customer retention strategies. FY26 growth will leverage retained borrowers (60% historically), new customer additions (~1 lakh/month), and retail finance (5% of AUM, +51% QoQ disbursement).

Question: Sir, my first question is, sir, while the new PAR addition is now lessening, any improvement is also seen in resolutions across SMA buckets, can you comment on that?
Answer: Resolution improved alongside reduced PAR accretion: 40% of Stage-2 borrowers are making partial payments. Collection efficiency (excluding arrears) rose to 93.3% in Q3. Employee engagement (management adopting zones) and tighter underwriting drove recovery.

Question: So, sir, my last question again on the guidance side... what sort of confidence you guys have that whatever guidance we are sharing for FY26 that will hold true?
Answer: FY26 guidance factors deleveraging trends, stabilized asset quality, and retail finance growth. Risks are mitigated by visible improvement since November 2024. Guardrail 2.0's limited impact (84% prompt payers in affected cohorts) supports retention and growth.

Question: Sir, just two questions from my side... how confident we are that the kind of improvement we have seen in Karnataka... will sustain?
Answer: Karnataka collections remained robust (99.4% X-bucket efficiency) despite localized disruptions. Government/industry discussions aim to address external challenges. Temporary issues (e.g., heavy rains in Tamil Nadu) are resolving, with no systemic risks to guidance.

Question: Sir, we wanted to understand if by any chance get disclosures about loan repayment schedules of your existing customers to other microfinance companies as well?
Answer: Bureau reports provide lender counts and disbursement/closure dates, enabling FOIR calculations. CA Grameen models customer repayment capacity and guardrail compliance, ensuring minimal attrition post-regulation.

Question: Sir, on the delinquency trends, you mentioned that they are transitory in nature... What has changed on your onboarding processes... which gives us confidence?
Answer: Tighter underwriting (voter ID validation, house verification) and district-level guardrails (e.g., max lenders = 2) improved new borrower quality. New-to-credit customers rose to 42% in Q3, with delinquency parity between MFI and retail borrowers.

Question: And just one more question, so I understand Bihar and UP are your core geographies... what are you doing differently in Bihar and UP?
Answer: Bihar/UP's improved collections (~6.5% portfolio share) reflect CA Grameen's localized strategies: stricter field verification, QC teams, and differentiated underwriting. Delinquency peaks (Oct-Nov 2024) have subsided, with new defaults slowing sharply.

Question: Firstly, like if you could just let us know that if you are facing some attrition at the branch manager level as well and if yes, like what would be that number for us?
Answer: Branch manager attrition is stable (~30%), with bench strength for promotions. Loan officer attrition, though higher, is managed via rehires (2,900 requests) and fresher recruitment. No operational disruptions reported.

Question: Also, I would like to know that what is our net forward flow rate from 1 to 30 and to 31 to 60 bucket and what was it earlier versus the current year?
Answer: Roll-forward rates (1-60 DPD) spiked 10%-15% during stress (July-November) but normalized by January. Stage-3 provisioning at 70% aligns with historical norms. Accelerated write-offs (INR 376 Cr in Q3) cleared 180+ DPD accounts.