Neutral Fusion Microfinance; target of Rs 175: Motilal Oswal

Neutral

Motilal Oswal's research report on Fusion Microfinance

Fusion reported a net loss of ~INR7.2b in 3QFY25 (vs. MOFSLe loss of INR2b), as NIM contracted due to interest income reversals and the reversal of all net Deferred Tax Assets (DTA) to date. At the normalized tax rate, Fusion would have reported a lower loss of ~INR3.8b. NII declined ~34% YoY to ~INR2.2b (~39% miss), while PPoP declined ~75% YoY to ~INR648b. The cost-to-income ratio was elevated at ~76% (PQ: ~40% and PY: ~37%). Net credit costs stood at ~INR5.7b. Annualized credit costs in 3QFY25 stood at ~23% (PQ: ~26%).

Outlook

We reiterate our Neutral rating on the stock with a revised TP of INR175 (based on 0.9x Sep’26E P/BV).

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