Buy Fusion Microfinance; target of Rs 605: Motilal Oswal

Motilal Oswal is bullish on Fusion Microfinance has recommended buy rating on the stock with a target price of Rs 605 in its research report dated May 07, 2024.

Broker Research

May 09, 2024 / 12:49 IST

BUY

26 Aug, 2025 12:21

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Motilal Oswal's research report on Fusion Microfinance

Fusion’s 4QFY24 PAT grew 16% YoY to INR1.33b (9% miss) because of elevated credit costs. NII grew 31% YoY to INR3.6b, while PPoP also grew 31% YoY to INR2.9b (7% beat). FY24 PAT grew 31% YoY to INR5.1b. Cost-income ratio stood at 37% (PY: 36%). Credit costs stood at INR1.2b (50% higher than estimates) and annualized credit costs rose 75bp QoQ to 4.8%. This included management overlay of INR180m in 4QFY24.

Outlook

Fusion, in our view, can deliver a calibrated CAGR of 24% in AUM and 28% in PAT over FY24-FY26E. It is also poised to deliver RoA/RoE of 5.3%/21% in FY26, aided by scale and productivity benefits, leading to a decline in the cost ratios. This is despite the guidance of higher net credit costs of 3% in FY25. We reiterate our BUY rating on the stock with a TP of INR 605 (based on 1.4x FY26E P/BV).

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