Fusion hits highest level since debut; soars 29% from listing day low

Shares of Fusion Micro Finance (Fusion) surged 6 per cent to hit a record high of Rs 415 on the BSE in Wednesday’s intra-day trade due to a stable outlook.

The stock of the microfinance institution has recovered 29 per cent from its low of Rs 321.40, touched on its listing day, November 15, 2022.

At the time of this report, it was trading 13 per cent higher against the issue price of Rs 368 per share. The stock had made a weak debut, listing at Rs 324.90, down 12 per cent from its issue price.

At 01:14 pm; Fusion Micro Finance was trading 3.3 per cent higher at Rs 403.80 as compared to a 0.34 per cent rise in the S&P BSE Sensex.

Fusion provides financial services to unserved and underserved women in rural and semi-rural areas across India. As of September 30, 2022 (Q2FY23), its total AUM stood at Rs 8,047 crore, up 54.46 per cent year-on-year (YoY) from Rs 5,210 crore in Q2FY22.

The company posted the highest ever profit after tax of Rs 95.05 crore in Q2FY23 against Rs 3.21 crore in Q2FY22.

Its net interest income increased 69 per cent YoY to Rs 452.3 crore from Rs 267.1 crore in the year ago quarter. As of Q2FY23, its gross NPA ratio was at 3.83 per cent, against 3.67 per cent in Q1FY23 and 4.49 per cent in Q2FY22.

On December 9, rating agency ICRA upgraded its credit rating on the company to A/Stable from ‘A- / Stable’.

“The rating revision factors in Fusion’s increased scale of operations and the improvement in its profitability indicators, driven by the increase in yields and the reduction in the credit costs in H1FY23. In addition, the rating action factors in the improvement in the company’s capitalisation profile, given the recent capital raise via its initial public offer (IPO),”it said.

Its return on managed assets (RoMA) improved to 3.9 per cent (annualised) in H1 FY2023 from 0.3 per cent in FY22. Further, Fusion raised Rs 600 crore of equity in November 2022, which has resulted in a strong net worth base for its scale of operations and growth plans, as per the agency.

The stable outlook on the [ICRA]A rating reflects ICRA’s opinion that the company will be able to maintain its credit profile, while expanding its scale of operations, maintain healthy profitability and improve its asset quality, it said.