India Ratings said that the upgrade factors in CA Grameen's improved geographical diversification, the ability to manage asset quality as demonstrated during the pandemic and other systemic events in the past few years, and the tailwinds of a supportive regulatory environment.

The rating also factors in the company's industry-leading franchise in the non-banking financial companies-micro finance institutions (NBFC-MFI) segment, the experienced management, healthy operating performance, and above average capital buffers.

India Ratings notes that the company has adopted certain operating practices, which could provide a strong operational control and oversight and aid faster response on emerging issues.

The agency considers the vulnerability of the sector to unexpected sporadic socio-political/idiosyncratic risks, getting accentuated due to higher geographic concentration, leading to sharp volatility in its performance, and as a result, NBFC-MFIs require above average capital and liquidity buffers to provide the cushion during these events.

India Ratings also notes that the company is working on strengthening its technological infrastructure.

CreditAccess Grameen offers collateral-free micro-loans to women from low-income households under the joint liability group model. It also offers retail finance products to support the evolving needs of its existing customers. The average ticket size for microfinance loans is about Rs 32,100, while that for retail finance is Rs 47,200. The promoter group, CreditAccess India N.V. held a 73.9% stake in the company at end-March 2022.

The company reported 104.41% rise in consolidated net profit to Rs 157.13 crore on a 13.50% increase in sales to Rs 821.89 crore in Q4 FY22 over Q4 FY21.

The scrip rose 0.60% to currently trade at Rs 1028.45 on the BSE.