CREDITACC - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 3.1
| Stock Code | CREDITACC | Market Cap | 21,384 Cr. | Current Price | 1,335 ₹ | High / Low | 1,497 ₹ |
| Stock P/E | 44.1 | Book Value | 448 ₹ | Dividend Yield | 0.00 % | ROCE | 9.55 % |
| ROE | 7.86 % | Face Value | 10.0 ₹ | DMA 50 | 1,313 ₹ | DMA 200 | 1,276 ₹ |
| Chg in FII Hold | -0.61 % | Chg in DII Hold | -0.10 % | PAT Qtr | 252 Cr. | PAT Prev Qtr | 126 Cr. |
| RSI | 52.7 | MACD | -0.01 | Volume | 4,09,159 | Avg Vol 1Wk | 6,63,525 |
| Low price | 848 ₹ | High price | 1,497 ₹ | PEG Ratio | 3.02 | Debt to equity | 2.81 |
| 52w Index | 75.1 % | Qtr Profit Var | 353 % | EPS | 30.3 ₹ | Industry PE | 26.6 |
📊 Analysis: CreditAccess Grameen shows strong earnings momentum with PAT rising from 126 Cr. to 252 Cr. (353% variation), but efficiency metrics remain weak with ROE at 7.86% and ROCE at 9.55%. Debt-to-equity is high at 2.81, reflecting leveraged operations. Dividend yield is 0.00%, offering no income support. Current P/E of 44.1 is significantly above industry average (26.6), suggesting overvaluation. PEG ratio of 3.02 further indicates stretched valuations relative to growth. Technicals show neutral momentum with RSI at 52.7 and MACD near zero, pointing to consolidation.
💰 Ideal Entry Zone: Considering DMA levels (50 DMA at 1,313 ₹, 200 DMA at 1,276 ₹) and support near 1,100 ₹, the ideal entry zone is 1,200–1,280 ₹. Current price (1,335 ₹) is slightly above comfort zone, making fresh entry less attractive.
📈 Exit / Holding Strategy: For existing holders, medium-term holding (2–3 years) is advisable to capture earnings momentum. Exit strategy: consider profit booking near 1,450–1,500 ₹ resistance zone. Long-term holding is not recommended unless ROE improves above 12% and debt levels reduce significantly.
Positive
- ✅ Strong PAT growth (353% variation) shows earnings momentum.
- ✅ EPS of 30.3 ₹ supports visibility.
- ✅ Technical support near DMA levels (1,276–1,313 ₹).
Limitation
- ⚠️ Weak ROE (7.86%) and ROCE (9.55%).
- ⚠️ High debt-to-equity (2.81) increases financial risk.
- ⚠️ No dividend yield, limiting investor income.
- ⚠️ P/E (44.1) is above industry average (26.6), suggesting overvaluation.
Company Negative News
- 📉 FII holdings declined (-0.61%), showing reduced foreign confidence.
- 📉 DII holdings also decreased (-0.10%).
- 📉 High leverage raises sustainability concerns.
Company Positive News
- 📈 Quarterly PAT doubled, showing strong operational momentum.
- 📈 EPS growth supports valuation strength.
Industry
- 🏦 Industry P/E at 26.6 highlights CreditAccess trades at a premium.
- 🏦 Microfinance sector has long-term demand potential but is sensitive to credit cycles and leverage risks.
Conclusion
🔎 CreditAccess Grameen shows strong earnings momentum but weak efficiency metrics and high leverage limit its attractiveness for long-term compounding. Ideal entry zone is 1,200–1,280 ₹. Suitable for medium-term holding (2–3 years), with exit near 1,450–1,500 ₹ resistance unless ROE improves and debt levels reduce.