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CreditAccess Grameen NCD Tranche I review (Apply)

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•    CAGL is a leading MFI with diverse activities and services in the finance sector.
•    It has posted growth in its bottom lines amidst all odds.
•    This maiden debt issue is rated IND AA - / Stable. 
•    The company is offering lucrative coupon rates.
•    Investors looking for a steady income may consider investing in this debt issue. 

CreditAccess Grameen Ltd. (CAGL) came with its maiden IPO worth Rs. 1131.19 cr. at a price of Rs. 422 per share having a face value of Rs. 10 each, in August 2018 and has been gaining momentum with recent quotes above Rs. 970 a share following its good financial performance in recent quarters.  To explore its funding needs, it is now coming out with a maiden debt offer with an attractive coupon rate and IND AA - / Stable rating from India Ratings & Research Pvt. Ltd. 

CAGL is a leading Indian micro-finance institution headquartered in Bengaluru, focused on providing joint liability group (JLG) loans and micro-loans primarily to women customers predominantly in rural areas in India. According to MFIN India, it is the largest NBFC- MFI in India in terms of the gross loan portfolio as of March 2022. The company offers a diverse suite of lending products that cater to the critical needs of customers throughout their life cycle and includes income generation, healthcare, education, festival celebration, home improvement, water, and sanitation. CAGL believes that its customer-centric business model, a wide range of product offerings, as well as well-designed product delivery and collection systems, have enabled it to achieve high customer retention rates and low credit costs. It focuses predominantly on customers in Rural areas in India, who largely lack access to the formal banking sector and present a latent opportunity for offering micro-loans. 

Its products are built on a deep understanding of the requirements of customers (especially customers from rural areas) developed over years and the flexibility of its products (in terms of ticket sizes, end-uses, and repayment options) and the manner of their delivery, which are key factors that differentiate CAGL from competitors and generates customer loyalty.

The company also provides retail finance products to existing individual customers who have demonstrated high entrepreneurial capacity, have graduated from the JLG model and are capable of borrowing larger loans in their individual capacity, against collateral. These loans are mainly offered to customers to establish a new enterprise or expand their existing business, meet their working capital requirements, and purchase inventories, machinery, two-wheelers, etc. It also provides supplementary loans as additional short-term credit facilities to customers who require working capital for business, livestock maintenance, home improvement needs, or for any other consumption purposes. CAGL has also started providing mortgage loans to non-customers in the geographies it operates through Retail Finance branches. It has followed a strategy of contiguous district-based expansion across regions. It believes that the acquisition of MMFL in Fiscal 2020 also helped with geographical diversification and deeper rural penetration. As of September 30, 2022, CAGL has a presence in 333 districts in the 14 states (Karnataka, Maharashtra, Madhya Pradesh, Tamil Nadu, Kerala, Odisha, Chhattisgarh, Goa, Bihar, Jharkhand, Gujarat, Rajasthan, Uttar Pradesh, and West Bengal) and one union territory (Puducherry) in India through 1,684 branches and 16,018 employees, serving an active consolidated customer base of 38.0 lakhs, as of September 30, 2022.

The company is coming out with a maiden debt issue of Secured, Redeemable Non-Convertible Debentures having a face value of Rs. 1000 each. The company mulls mobilizing Rs. 250 cr. as a base amount and has a green shoe option to retain oversubscription to the tune of Rs. 250 cr. thus, making an overall size of the issue worth Rs. 500 cr. under The Tranche I issue. It has a shelf limit of Rs. 1500 cr. The issue opens for subscription on November 14, 2022, and will close on or before December 02, 2022. Minimum application is to be made for 10 NCDs and in multiple of 1 NCD thereon, thereafter. Post allotment, NCDs will be listed on BSE and NSE. CAGL is spending Rs. 9.99 cr. for this Tranche I issue. From the net proceeds of the issue, CAGL will use at least 75% for repayment of existing borrowings with interest and onward landing while a maximum of up to 25% for general corporate purposes. 

The issue is solely lead managed by A K Capital Services Ltd., KFin Technologies Ltd. is the registrar while Catalyst Trusteeship Ltd. is the Debenture Trustee for this debt offering. 

This offer has a tenor of 24 months, 36 months, and 60 months. Its coupon rates is ranging from 9.45% to 10.00% and interest payment options are monthly or cumulative, as per the selection of the series applied for. The company has allocated 25% for Institutions, 35% for Non-institutions, 15% for HNIs, and 25% for Retail investors. 

This debt issue is rated IND AA - / Stable by India Ratings and Research Pvt. Ltd. These ratings are not a recommendation to buy, sell or hold securities and investors should take their own decisions. These ratings are subjected to a periodic review during which they may be raised, affirmed, lowered, withdrawn, or placed on Rating Watch at any time on the basis of factors such as new information. The rating should be evaluated independently of any other rating. The Credit Rating Agency's website will have the latest information on all its outstanding ratings. In case of any change in credit ratings till the listing of NCDs, the Company will inform the investors through public notices/ advertisements

On the financial performance front, for the last three fiscals, CAGL has (on a consolidated basis) posted a total income/net profit of Rs. 1705.48 cr. / Rs. 335.49 cr. (FY20), Rs. 2466.07 cr. / Rs. 131.40 cr. (FY21), and Rs. 2750.13 cr. / Rs. 357.10 cr. (FY22). 

For H1 of FY23, it earned a net profit of Rs. 315.71 cr. on a total income of Rs. 1574.83 cr. As of September 30, 2022, its paid-up equity capital of Rs. 156.11 cr. is supported by free reserves of Rs. 4232.80 cr. As of the same date, its debt-equity ratio stood at 2.84. gross AUM of Rs. 15800.68 cr.

Conclusion / Investment Strategy

This leading company in NBFC - MFI (Micro Finance Industry) segment with continued growth has been doing good and is poised for better prospects ahead. This lucrative debt issue with coupon rate and AA-/Stable rating may be considered by investors looking for a regular steady income for the medium to long term.

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on November 10, 2022

Review Author

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on the information published here. My reviews do not cover GMP market and operators game plans. Any reader taking decisions based on any information published here does so entirely at their own risk. Investors should bear in mind that any investment in stock markets is subject to unpredictable market-related risks. The above information is based on RHP and other documents available as of date coupled with market perception. The author has no plans to invest in this offer.

About Dilip Davda

Dilip Davda, a freelance journalist

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.

(Dilip Davda -SEBI registered Research Analyst-Mumbai,

Registration no. INH000003127 (Perpetual)

Email id: ).

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