CreditAccess Grameen IPO: Brokerage Views & Run Up to IPO

CreditAccess Grameen IPO
This post on CreditAccess Grameen IPO tries to bring out consolidated brokerage views , Grey Market Premium, Subscription information. The information collated from various sources and reports in public domain can help investors to decide whether they should subscribe to CreditAccess Grameen IPO or not.

Related Posts:  CreditAccess Grameen IPO Review
Subscription: CreditAccess Grameen IPO  ( x times)
  QIB NII Retail Emp Total
Day 3     
Day 2   0.79   0.02 0.28 0.37
Day 1   0.69  0.01 0.11 0.25
CreditAccess Grameen IPO: Grey Market Premium etc.

09/08/18 Grey Market Premium Rs.  NIL

Anchor Investors

Anchor Investors (AIs) portion in the Public Issue of CreditAccess Grameen Limited 8,041,617 equity shares have been subscribed  by 21 AIs at Rs. 422/- per equity share. Some of the Anchor investors are Neuberger Berman Emerging Markets Equity Fund, Eastspring Investments India Equity Open, Pictet – Indian Equities, ICICI Prudential Banking and Financial Services Fund, Sundaram Mutual Fund, Citigroup Global Markets Mauritius and BNP Paribas Arbitrage etc.

Click here for Complete CreditAccess Grameen Anchor Investors List

Consolidated opinion of Brokerages, Analysts, Business New Paper Reports, Management Views on CreditAccess Grameen IPO.

Angel Broking: “At upper end of the IPO price band, CAGL is valued at 3.8x FY18 book value (pre-IPO) and on post dilution basis at 2.9x of BV. The strong sponsorship of CreditAccess Asia, along with a well capitalised balance sheet and an experienced and focused management provides an excellent base for the next level of growth. Based on the above positive factors we assign SUBSCRIBE rating to the issue”

Capital Market: “Score 47/100, Post-issue, the book value (BV) is Rs 143.41 at the issue price of 418 and Rs 143.55 at the issue price of Rs 422. P/BV works out to 2.91 times at lower price band and 2.94 time at the upper price band.Among peers, Bharat Financial Inclusion is trading at P/BV of 5.69 times, Satin Creditcare at P/BV of 1.55 times and Equitas Holdings at P/BV of 2.19 times. “

Choice Broking: CAGL’s demanding valuation at Rs60,496.3 mn is valued at P/ABV of 2.9(x) to FY18 annualized adjusted BVPS (post issue) which is premium to peers (Ujjivan Financial -2.7x, Equitas – 2.8x). At this valuation, the issue presents limited room for further upside. Considering all these parameters, we assign ‘Subscribe with Caution’ rating to the issue. However, we think that business’s fundamentals are strong and it will create value in the short to medium term. Investors are thus recommended to invest in this issue for short to medium term period.”

Emkay: “CRAG has announced an IPO price band of Rs418-422. At an upper price band of Rs422, the stock is available at ~2.9x P/FY18 Book (post money) & ~34.8x P/FY18 earnings with ~11.8% FY18 ROEs (before dilution). Considering inherent risk associated with the business model along with low RoEs, we believe that the valuation premium is not justified. We firmly believe that the management has duly
considered low RoEs and higher adequacy while determining the price however we would AVOID the company even at current price considering lower probability of RoE improvement over next few quarters. We recommend AVOID to the IPO

Hem Securities :“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/share. Although co has shown strong growth with CAGR of more than 50% from FY14 to FY18 in its financials added by solid fundamentals as some of the co’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.

Prabhudas Liladhar : “RoEs for the company have declined almost 800 bps in past 3 years and 500 bps in past 4 years. High opex intensive business (38% avg cost-income), elevated credit costs (3%+ past 2 years) have restricted RoEs to 12%. Against this backdrop, post-IPO valuations (30x+ P/E and 2.9x P/B FY18, 2.6X FY19E) appear expensive and believe stepping up return profile is the key. Any improvement in credit costs and NIMs being retained at 10%+ levels should prove as key catalysts. While, we recommend Subscribe for LONG TERM, do not expect any short term gains.”

SMC : “Rating 1.5/5 The company offers loans mainly to rural women by using the joint liability group (JLG) model of lending. The company posted revenue growth of 56% CAGR in the last 5 years. Its customer-centric business model, wide range of product offerings, as well as its well designed product delivery but Microfinance loans are unsecured and are susceptible to various operational and credit risks which may result in increased levels of NPAs, may adversely affect its business, results of operation and financial condition. Moreover, the Company’s operations are concentrated in Karnataka and Maharashtra. Pricing of the issue looks at a premium in comparison to its listed peers of its size. Those who want to invest may opt the issue as long-term investment. “

SP Tulsiyan website: “Geographically concentrated portfolio, low fancy for mid-caps in secondary markets currently and regulatory uncertainties surrounding MFI business weigh negatively on the issue. Issue pricing doesn’t help either. While the company has delivered financially in the past, one may skip the IPO for now and review it post listing.

Standard disclaimer:  I am not a SEBI registered analyst and above analysis is for educational purpose only. I may have vested interest in every stock I discuss and my views may be biased. Please do your own due diligence as stock market investments have high degree of inherent risk. 

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