Emkay Global Financial's research report on Fusion Micro Finance
Fusion MFI reported in-line PAT of Rs1.3bn/~5% RoA in Q2FY24, mainly on the back of healthy margins and higher ‘other income’, and partly offset by an elevated LLP (3.8% of loans). The company has received the first tranche of recovery from the Assam loan relief scheme (of Rs50mn) and should see further recovery going ahead. The management expects slippages/credit cost to remain elevated in the near term due to seasonality factors and its new aggressive write-off policy, but should start normalizing 4Q onwards.
Outlook
Factoring-in a better margin/fee income delivery, partly offset by a higher LLP, we revise FY24-26E earnings estimate by 2-4% and expect Fusion to report a strong RoA/RoE of 4.7-5.1%/20-21%, respectively. Hence, we retain our target price at Rs810/share, valuing the stock at 2.1x its Sep-25E ABV and maintain our BUY rating.
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
