Neutral Fusion Finance; target of Rs 170: Motilal Oswal

Motilal Oswal recommended Neutral rating on Fusion Finance with a target price of Rs 170 in its research report dated May 26, 2025.

Broker Research

May 28, 2025 / 15:00 IST

Neutral

26 Aug, 2025 12:21

Volume

Todays L/H

Motilal Oswal's research report on Fusion Finance

Fusion Finance (“Fusion”) reported a net loss of ~INR1.65b in 4QFY25 (vs MOFSLe loss of INR1.4b). FY25 loss stood at INR12.2b (vs. PAT of INR5b in FY24). NII in 4QFY25 declined ~25% YoY to ~INR2.7b (~7% miss). Cost-income ratio moderated to ~70% (PQ: ~76% and PY: ~37%). PPoP declined ~69% YoY to ~INR901m. Net credit costs more than halved sequentially to ~INR2.55b (vs MOFSLe of ~INR3.2b). Annualized credit costs in 4QFY25 stood at ~12% (PY: ~5% and PQ: ~23%). The company undertook accelerated write-offs of INR4.05b (out of the total write-off of INR9.2b) during 4QFY25. Fusion had breached covenants on borrowings of ~INR48b, resulting in these borrowings becoming payable on demand. The company has successfully obtained covenant waivers for ~86% of such borrowings that were in breach. The company is in discussions with the remaining lenders to obtain similar extensions. As of now, no demand for immediate repayment of the borrowed funds has been made by the lenders.

Outlook

However, sustained performance over the next 3-4 months will be crucial to validate this recovery as a definitive shift. With no other near-term catalysts, we reiterate our Neutral rating with a revised TP of INR170 (based on 0.9x Mar’27E P/BV).

For all recommendations report, click here