Summary
CreditAccess Grameen Limited - Q3 FY26 Earnings Call Summary Tuesday, January 20, 2026 5:30 PM IST
Event Participants
Executives 4 Ganesh Narayanan (MD & CEO), Gururaj Rao (COO), Nilesh Dalvi (CFO), Sahib Sharma (DGM, Investor Relations)
Analysts 8 Abhijeet Tibrewal (Motilal Oswal), Chinmay Nema (Prescient Capital), Chintan Shah (ICICI Securities), Deepak Shinde (HDFC Securities), Jay (NBIE), Nidhesh (Investec), Rajkumar Vaidyanathan (RK Invest), Shreya Shivani (Nomura)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Gross Loan Portfolio (GLP) | ₹26,566 crores | +2.6% QoQ; Adjusted for write-offs, growth was 3.3% QoQ as momentum returned in Dec-25. |
| Disbursements | ₹5,767 crores | +13.4% YoY; December exit month saw strong traction at ₹2,200 crores. |
| Borrowers added | 2.1 lakh | Total 9M FY26 additions at 6.4 lakh; 50% of new additions came from outside top 3 states. |
| Net Interest Income (NII) | ₹977 crores | +13.4% YoY; Driven by yield improvement and lower borrowing costs. |
| NIM | 13.9% | +60 bps QoQ; Aided by 21.0% portfolio yield and 9.4% average cost of borrowing. |
| Cost of Borrowing | 9.4% | -26 bps QoQ; Incremental cost for Q3 stood at 8.9% due to disciplined liability management. |
| GNPA (60 DPD) | 4.04% | Including forward flows in Stage 3; PAR 90 stood at 2.94%. |
| NNPA (60 DPD) | 1.36% | Management maintains conservative provisions (132 bps over PAR 90). |
| Credit Cost | ₹343 crores | Includes ₹59 crore accelerated write-offs and ₹37 crore ECL rate increase; core cost was 96 bps. |
| PAT | ₹252 crores | Doubled QoQ; Adjusted for labor code impact, PAT was ₹266 crores. |
| ROA / ROE | 3.5% / 13.8% | Adjusted for one-time labor code impact, ROA stood at 3.7% and ROE at 14.6%. |
| Capital (CRAR) | N/A | Management noted a strong balance sheet; specific Tier-1 not mentioned but implied healthy. |
Geographic & Segment Commentary
- Core States (Karnataka/TN): Karnataka has shown a notable recovery with asset quality reversing to historical levels. Management attributed this to tighter credit oversight and deep-rooted branch presence (every 30km), despite industry-wide concerns in the state.
- Non-Core States (UP/Bihar/MP): Monthly PAR accretion has declined to 25-30 bps from earlier peaks of 40-50 bps. While still slightly higher than core states, the trend is consistently downward.
- Retail Finance: Segment share increased to 14.1% of AUM (₹3,780 crore) from 11.1% QoQ. Growth is driven by migrating high-quality vintage customers to individual business loans (Unnati and Vishesh products).
Company-Specific & Strategic Commentary
- MFIN Guardrails: Implementation has deleveraged the book; borrowers with >3 lenders dropped to 4.9% (Dec-25) from 25.3% (Aug-24). Unsecured indebtedness >₹2 lakh fell to 7.8% from 19.5% in the same period.
- Digital Adoption (Grameen Mahi): Platform reached 1 million downloads, facilitating instant eligibility checks and targeted retail offerings. Digital collections reached 20% of total collections by December 2025.
- Graduation Strategy: Approximately 5-7% of JLG customers are transitioning to retail finance annually. This allows the bank to retain quality borrowers with higher credit needs (tickets up to ₹1.75 lakh) while maintaining a lower risk profile.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Credit Cost | 4.0% - 4.5% (FY27) | Factors in monthly PAR 15+ accretion of 30-35 bps; may be revised lower in May if current 18-20 bps trend holds. |
| AUM Growth | 20%+ (Medium-term) | Expected early teens growth in MFI JLG book, with retail finance providing the remaining growth delta. |
| ROA | 4.0% - 4.5% (Target) | Management views 4.5% as a structural cap; excess returns will be passed to customers via lower pricing. |
| NIM | 14.0% - 14.5% (FY27) | Expecting incremental borrowing costs to drop by 10 bps per quarter for the next 2-3 quarters. |
Risks & Constraints
| Risk | Context |
|---|---|
| Asset Quality Stickiness | While early buckets (0-90) have improved, PAR 90+ remains sticky due to forward flows from previous quarters’ stress. |
| Rejection Rates | Approval rates for new borrowers have dropped to 55-60% (from 65% pre-guardrails), requiring more effort to maintain growth. |
| Regulatory / Labor | One-time impact of ₹18 crore from new labor codes; management has proactively adjusted salary structures to 50% basic/DA. |
Q&A Highlights
Asset Quality & Karnataka
- Question: Why is Karnataka improving for CREDAG while other lenders report continued stress? (Shreya Shivani)
- Answer: Karnataka is our home state with 25 years of presence and a branch every 30km. Our data shows a sharp reversal across microfinance and mortgage; we expect the rest of the industry to follow in a few months (Ganesh Narayanan).
Growth & Customer Acquisition
- Question: New customer acquisition is lower than Q2; when does it pick up? (Rajiv Mehta)
- Answer: December saw 90,000 additions and ₹2,200 crore disbursements. Field sentiments are positive now that historical PAR is cleared; Q4 should see a return to historical run rates (Ganesh Narayanan).
Borrowing Costs & Liquidity
- Question: Are bank lines drying up for MFIs as reported in media? (Shreya Shivani)
- Answer: Our bank term loan dependency is <60% due to diversification. We haven’t faced issues and raised ₹3,917 crore in Q3 at a marginal cost of 8.9% (Nilesh Dalvi).
Credit Cost Rationale
- Question: Is the FY27 credit cost guidance conservative given Nov-Dec trends? (Renish)
- Answer: It assumes 30-35 bps monthly accretion. December/January are trending at 18-25 bps. We will monitor for 3-4 more months before revisiting assumptions in May (Ganesh Narayanan).
Key Takeaway
CreditAccess Grameen reported a strong recovery in Q3 FY26, with PAT doubling QoQ to ₹252 crores as post-crisis normalization took hold. Asset quality significantly improved, evidenced by PAR 15+ accretion dropping to 18 bps in December and a sharp recovery in the core Karnataka market. The company successfully executed its strategy of shifting towards a higher-quality borrower base, with 43.4% unique borrowers and 14.1% of AUM now residing in the retail finance segment. While microfinance growth remains cautious due to stricter MFIN guardrails and lower approval rates (55-60%), strong disbursement momentum in December (₹2,200 crores) signals a return to growth. Management has guided for a 4.0-4.5% ROA and 20%+ AUM growth for FY27, backed by a declining cost of funds and rising NIMs. The primary watch point remains the stabilization of Stage 3 forward flows and the final settlement of credit costs in non-core states.
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