CreditAccess Grameen Q2 FY27 Earnings Call: Raises FY27 ROA Guidance to 5.2-5.8%, Best Asset Quality in 10 Quarters

CreditAccess Grameen Ltd held its Q2 FY27 earnings call on October 22, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Record Profitability with Best Asset Quality in 10 Quarters

• Highest-ever quarterly PAT of Rs.502 Cr — a fivefold increase over the past five years; H1 FY 2026-2027 PAT of Rs.995 Cr vs Rs.778 Cr in H1 FY 2025-2026, with H1 ROA at 5.9% and ROE at 23.8%.
• AUM grew 19.5% YoY and 2.1% QoQ to Rs.30,946 Cr — Q2 disbursements of Rs.6,355 Cr (+19.4% YoY, +4.1% QoQ) took H1 FY 2026-2027 disbursements to Rs.12,461 Cr.
• Asset quality back to pre-crisis levels — GNPA 1.79%, NNPA 0.59%, PAR 90+ at 1.11%, all improving sequentially; collection efficiency ex-arrears at 97.9% and September ex-packet collections at 99.71%.
• NIM expanded to 15.1% from 14.4% in Q1 FY 2026-2027 on lower interest reversals, higher-yielding individual loans and stable borrowing costs; PPOP grew 39.6% YoY to Rs.970 Cr with cost-to-income at 28.2%.
• Q2 credit cost of Rs.299 Cr (0.99% non-annualized) — 70 bps from new PAR and 29 bps from rising ECL rates; ECL provisioning strengthened to 3.31% including a 45 bps (Rs.137 Cr) macro prudential buffer.
• Digital collections at 26.3% vs 18.1% a year ago, alongside branch network expansion to 2,326 branches across 460 districts.

Retail Mix Rising, Group Book Rebuilding After Write-Offs

• Retail finance AUM reached Rs.7,200 Cr (23.3% of AUM), up from 20.6% in Q1 FY 2026-2027; 6.8 lakh of the 45 lakh borrower base (15%) now avails retail finance.
• Secured book grew 60.9% YoY to Rs.695 Cr — the two-wheeler book crossed Rs.60 Cr vs Rs.20 Cr in Q1 FY 2026-2027; mortgage business has expanded from 120 to 425 branches, with plans to scale up a few hundred branches every year.
• Group loan book at Rs.23,746 Cr (September 2026), down 2% from the start of FY 2026-2027 — driven by Rs.614 Cr of H1 write-offs (mostly group loans) and graduation; management expects group loan growth to return to guided levels in H2 FY 2026-2027.
• 2.3 lakh new borrowers added in Q2 (35% new-to-credit), taking H1 additions to 4.9 lakh; borrower retention improved from 85% in FY 2025-2026 to 88% in H1 FY 2026-2027.
• IBL graduation book shows materially lower delinquencies — the Unnati prime product has average customer tenor over 7 years and average credit score above 730, with PAR 30 never crossing 3%, including at the peak of last year's credit cycle.
• Management expects ~6-8% of the 50 lakh customer base to convert to individual loans yearly (period unspecified), as part of a five-year strategy to graduate good-quality customers into individual business loans and secured products.

50 bps Yield Cut Passed; Further Cuts Conditional

• Management passed a 50 bps lending rate cut in Q3 FY 2026-2027, consistent with prior guidance of 50 bps cuts in Q4 FY 2026-2027 and Q1 FY 2027-2028; subsequent cuts are not compulsory and depend on how credit cost and borrowing cost evolve.
• The 50 bps yield cut (all products except mortgage and two-wheeler) takes 4-6 quarters to flow through — yields peaked in Q2 FY 2026-2027 and should be broadly stable or slightly higher in Q3 FY 2026-2027 on back-book momentum before declining.
• Blended borrowing cost around 9% — CFO Nilesh Dalvi guided borrowing cost to stay in the 9.2-9.3% range till March (end of FY 2026-2027), despite 25-30 bps sequential increases from NCD and longer-tenor raises; mix is ~30% fixed, 45% MCLR-linked, balance repo-linked.
• USD 175 million ECB signed in October FY 2026-2027 at a lower rate than the USD 200 million ECB it replaces — syndicated by Standard Chartered Bank and DBS Bank, with 10 institutions participating despite FCNR(B) competition; Rs.940 Cr of domestic NCDs also mobilized in FY 2026-2027.
• Capital adequacy at 26.9% (Tier 1: 26.2%) with an equity base of Rs.8,919 Cr; marginal and average cost of borrowing both at 9.1% in Q2.
• Management aims to retain a risk-adjusted NIM of 10% to achieve a targeted steady-state ROA of 4.5-5%; on a risk-adjusted basis with a 14.5% NIM, it says it can absorb a 4-4.5% credit cost and still deliver a 5% ROA.

Flood-Driven PAR Accretion Normalizing; Drought Is the Watch Item

• September PAR 15 accretion spike in UP, Bihar, MP and Tamil Nadu attributed to floods and festivities — as of October (Q3 FY 2026-2027), all states except Maharashtra have normalized, with no spike in Karnataka or Tamil Nadu; northern flood collections recovered within 2-3 weeks.
• Gross NPA (PAR 15 pool) at Rs.550 Cr as of Q2 FY 2026-2027, implying write-offs and credit cost should decline in H2 FY 2026-2027; Stage 1 provisioning at ~1.8% plus the 45 bps (Rs.137 Cr) macro buffer, expected to inch up 5-6 bps per quarter in Q3 and Q4 FY 2026-2027.
• FY 2026-2027 credit cost guidance maintained at 3.5-4% — excluding the 45 bps buffer, credit cost is running at roughly 2.3% (3.45% including); management does not envisage crossing guidance in FY 2026-2027 even after budgeting for drought.
• Early drought stress visible in six central Maharashtra districts — some customers requesting additional repayment time including restructuring options; management characterized it as "very early signs" to be watched, with November-December the key window, and did not have the district portfolio exposure percentage on hand (offered offline).
• Pricing flexibility caps at ~5% credit cost — management can pass through credit costs up to 4.5-5% and still protect ~4.5-5% ROA; reference point: in FY26, with a 7% credit cost, the company delivered a 2.7% ROA.
• Analyst (Anand Dama, Nuvama) flagged that a shift toward higher borrower acquisition could raise OpEx and credit costs, pressuring ROA faster than expected — management agreed partially, attributing the lag to the company coming out of a strong two-year credit cycle.

Book Grew 19% but Customers Only 1% — Write-Offs the Culprit

• Analyst (Rishi Modi) flagged the 19% book growth vs 1% customer count growth as rising customer concentration; management attributed the decline to heavy historical write-offs, graduations and guardrail breaches rather than competitive attrition.
• ~10 lakh customers added over the last four years, including 2.5 lakh in Q1 FY 2026-2027 and 2.3 lakh in Q2 FY 2026-2027, but write-offs (largely over the last one year coming out of the credit crisis) and natural attrition masked the growth; management targets publishing more than 1 lakh new customers per month vs the current ~80,000 run-rate in Q3 and Q4 FY 2026-2027.
• Retention improved to 88 (from 85); of ~15% historical attrition, management estimates 7-7.5% were customers graduating upward, with the remainder either not borrowing or defaulting.
• Customer MFI exposure under CA Grameen plus 2 declined from 17% to 15% QoQ (Q2 vs Q1 FY 2026-2027), with the plus 3 bucket also declining; management expects plus 3 exposure to gradually decline but not to zero, citing credit bureau-related issues (period unspecified).
• Risk controls cited — district exposure capped at not more than 2% of AUM, district-level lending limits based on per capita income and repayment rates, and vintage- and district-based product-level controls.
• Gold loan exposure stable at 10-12% of the customer base with no swing vs 2-3 years prior; management's internal monthly research over the last 12-14 months shows customers with retail exposure have better credit profiles than pure microfinance customers.

Raised FY27 Guidance; Promoter-Level Strategic Investor Talks Underway

• FY 2026-2027 guidance raised — ROA to 5.2-5.8% (from 4-4.8%), ROE to 21-24% (from 16-20%), NIM to 14.4-14.7% (from 12.8-13.2%), even after factoring the 50 bps October rate reduction; AUM growth retained at 20-25%, cost-to-income at 29-30%, credit cost at 3-4%.
• Management expressed full confidence that the annual guidance given for FY 2026-2027 will be met, expecting strong performance in Q3 and Q4 FY 2026-2027 after "two good quarters" delivered so far.
• For FY 2027-2028, management is confident of holding loan growth at 20-25%, driven by a combination of microfinance (range-bound at 10-12% per the strategic plan) and faster-growing retail; formal FY 2027-2028 margin guidance may come only by Q4.
• Promoters are in active discussion with a strategic investor for the whole company — management clarified the investor sits at the promoter holdco level, not at the CreditAccess Grameen level, with progress expected over the next couple of quarters, subject to rightful price discovery and no time-bound element.
• On the CGFMU credit guarantee scheme — annual premium cost is around 1.3-1.5%, it covers around 75% of claimed losses with a total cap of 15% of the insured pool; management noted a significant portion of banks and SFBs have already covered their books, and may enroll a few thousand crores over the next few years (period unspecified), having not enrolled so far given its underwriting capabilities. A budgetary approval for the microfinance guarantee is pending, expected to open up "in a week or two."
• On insurance regulation reform, management has not had direct discussions with the regulator and is waiting for regulations to firm up, believing final norms will be "slightly moderated"; it estimates a 25-30 bps ROA impact from lower insurance commissions (period unspecified) and believes it is better placed than peers to cover it through pricing.
• Competition seen as temporarily reduced — banks have not vacated the microfinance space but have slowed down; management views this as a temporary sourcing advantage over the course of FY 2027-2028 and expects peers to gradually scale up. Management sees no 2024-style credit crunch; the constraint on industry growth is liquidity access for smaller NBFCs.