Fusion Micro Finance lists at 2% discount to issue price at Rs 359

Non-banking finance company (NBFC) Fusion Micro Finance made a lacklustre debut on November 15, despite a positive market sentiment. The stock opened at a 2.3 percent discount against its issue price of Rs 368.

The stock started trading at Rs 360.50 on the BSE, while the listing price on the NSE was Rs 359.50.

The issue, which hit the market during November 2-4, was subscribed 2.95 times, as the portions set aside for qualified institutional buyers (QIBs), retail and non-institutional investors were subscribed 8.6 times, half a percent and 1.38 times, respectively.

The proceeds from the issue will be utilised by the company for augmenting its capital base, according to the RHP.

Fusion Micro Finance provides financial services to unserved and underserved women in rural and peri-rural areas across India. It has the fourth fastest gross loan portfolio, averaging an annual growth rate of 54 percent between FY17 and FY21, according to CRISIL.

Analysts do not appear bullish on the stock. “Majority of its revenue comes from certain states (Bihar, Uttar Pradesh, Odisha, Madhya Pradesh, Tamil Nadu, Punjab, Rajasthan) and business is exposed to interest rate risk, debt to equity ratio,” said Narendra Solanki, Head-Equity Research at Anand Rathi Shares & Stock Brokers.

They also said that return ratios of the company remained depressed at an average RoE of 2.6 percent over FY21-22, due to higher credit cost. “Any unexpected shock on credit cost front may weigh on return ratios heavily. We advise investors who have been allotted the shares to book profit if they get listing gain,” said Satish Kumar, Research Analyst, Choice Broking.