Fusion Microfinance crashes to 20% lower circuit, Motilal Oswal downgrades to 'neutral'

Fusion shared that ~24 percent of its borrowers (as of Mar’24) have MFI loans from five or more lenders.

Fusion Microfinance shares hit the lower circuit in trade on August 7, after the BFSI player reported a net loss for the quarter ended June, 2025.

Fusion Finance has posted a net loss of Rs 36 crore for the quarter ended June, as compared to a profit of Rs 120 crore in the corresponding quarter last year.

During the quarter, asset quality worsened noticeably. Gross Non-Performing Assets (NPA) rose to 5.46 percent, up from 2.89 percent in March. Net NPA increased to 1.25 percent, compared to 0.6 percent in March.

At 10.50 am, shares of the firm were quoting Rs 346.4 on the NSE, down by 20 percent as the stock saw only sellers.

Follow our live blog to catch all the updates

Motilal Oswal downgraded the stock to 'neutral', with a price target of Rs 440 per share as annualized credit costs rose sharply.

Fusion shared that ~24 percent of its borrowers (as of Mar’24) have MFI loans from five or more lenders and that the stress currently being seen in the sector is predominantly because of customer over-leveraging, weak
center meeting attendance, customer migrations and field attrition.

"While this is still an evolving situation, our view is that the current sectoral stress because of high customer-leverage is more broad-based across geographies (rather than being state-specific) and will perhaps linger on for longer than most expectations," said Motilal Oswal. Guardrails put in place by

Fusion Microfinance will calibrate the growth in the sector and might bring back normalcy in asset quality/collections, but not before the current stress in the sector has run its course. During this period, credit costs will continue
to remain elevated, added the brokerage.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.