Hi Guys,
I am new to the entire value investing thing and while I was scouting for stocks to invest and found out CreditAccess. However, I am confused with the recent price movement of CreditAccess.
While I understand that there is ambiguity due to RBI’s stance on NBFC and MFI, however, I felt that this stock has fallen sharply compared to other peers in the industry.
I was trying to list down possible reasons for the same:
- RBI policies [impact seen in the entire industry]
- Increasing D/E [?]
- Future guidance towards the cautious side [?]
- Increasing NPAs [?]
- Also, this industry is cyclical and we are at the cusp of a “bad cycle” now [?] …somewhere increasing NPAs would point towards that [?]
- Election uncertainty: I noticed that a few politicians are talking about loan waivers [?]
IMO, the scrip looked strong fundamentally and rudimentary DCF shows that the stock is undervalued by 20-25%. Also, whenever the fed rate cuts happen, it would have helped with the overall growth of the industry as well.
I was surprised to see a sharp correction of this stock even with good Q4’24 results.
It would be helpful if someone who has a strong understanding of MFI or tracking this stock for a longer period could present their hypothesis.
Thank You.