Fusion Finance Q1 Review: Motilal Oswal Stays 'Neutral' Post Q1 Results — Check Target Price
In FY26, it will focus on transitioning to a growth phase cautiously but with confidence.
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Fusion Finance reported a net loss of ~Rs 923 million in Q1 FY26 (vs estimate loss of Rs 434 million). Net interest income declined ~31% YoY to ~Rs 2.7 billion (in line). Opex rose 13% YoY to Rs 2.1 billion (in line) and cost-to-income ratio rose ~120 bp QoQ to ~70.8% (previous quarter: ~69.6%). PPoP declined ~71% YoY to ~Rs 866 million (5% miss).
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Motilal Oswal Report
Fusion Finance Ltd. reported another soft quarter, with both AUM growth and disbursements remaining muted as the company maintained its strategic focus on improving portfolio quality and strengthening collection efficiency.
On a positive note, credit costs saw a sequential decline, supported by improved collection efficiency and lower delinquencies during the quarter. The company is taking slow and measured steps to regain stability and normalcy.
Fusion, in our view, is likely to deliver an AUM CAGR of ~1% and pre-provision operating profit CAGR of ~-9% over FY25-27.
We estimate RoA/RoE of ~3.7%/12% in FY27. With no nearterm catalyst, we reiterate our Neutral rating on the stock with a revised target price of Rs 170 (based on 1x Mar’27E price/book value).
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