EU and US could reach trade deal this weekend - Reuters
On Tuesday, CreditAccess Grameen Ltd (CREDAG:IN) experienced a change in stock rating as HSBC analysts downgraded the company from Hold to Reduce. The move was accompanied by a maintained price target of INR900.00, suggesting a potential downside for the stock.
The downgrade comes as HSBC analysts observed that CreditAccess Grameen, a leading microfinance institution (MFI), has been trading at a significant premium compared to its peers. The stock has been valued at 1.9 times its forecasted FY27 book value per share (BVPS), a stark contrast to the 0.5 to 0.9 times BVPS valuation range of other MFIs and 0.6 to 1.1 times of smaller banks with substantial MFI operations.
HSBC’s analysis points to several factors that could lead to a market correction for CreditAccess Grameen. Among these factors are the company’s high valuations, a downward revision in guidance, and a consistent pattern of cuts to earnings per share (EPS) estimates.
The price target of INR900.00 set by HSBC implies a roughly 20% downside from the current market price, indicating the analysts’ expectation that the stock may decrease in value. The firm’s decision to maintain the price target while downgrading the stock rating underscores their perspective on the company’s future performance.
The downgrade by HSBC serves as a signal to investors about the potential risks associated with CreditAccess Grameen’s stock, particularly in light of its valuation and the competitive landscape of the microfinance sector.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.