Fusion Gets 'Buy' Upgrade From Motilal Oswal, Spandana Downgraded To 'Neutral' In MFI Space — Here's Why

The MFI sector is emerging out of a stress cycle, with signs of normalization visible in collection efficiencies, flow rates, and PAR trends. Profitability in the very near term (over the next one to two quarters) will remain weighed down by muted AUM growth, high-cost ratios, and elevated credit costs..NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy. .Motilal Oswal Report.Business growth remains a secondary focus for most MFI players, as the primary concern is stabilizing asset quality and collections. The consensus is that only after overcoming the "hump of collections" will institutions pivot to growth strategies focused on disbursements and AUM growth.  The MFI sector is emerging out of a stress cycle, with signs of normalization visible in collection efficiencies, flow rates, and PAR trends. Profitability in the very near term (over the next one to two quarters) will remain weighed down by muted AUM growth, high-cost ratios, and elevated credit costs. However, we expect earnings to exhibit a strong recovery from Q4 FY26 or FY27 onwards. NBFC-MFIs (except CreditAccess Grameen) are trading at undemanding valuations of 0.5x-1.1x FY27E BV, factoring in near-term stress but not fully capturing the upside from structural shifts in underwriting, portfolio diversification, and subsequent improvement in operating leverage.We believe that the worst of this MFI asset quality cycle is now clearly behind us, and companies with stronger risk frameworks, prudent geographic diversification, and better access to funding will outperform peers as the industry normalizes. We upgrade Fusion to Buy (target price: Rs 240), reiterate our Buy rating on CreditAccess Grameen (target price: Rs 1,660), and downgrade Spandana to Neutral (target price: Rs 280). We also include snippets on Muthoot Micro finance (Not Rated), Satin Credit Care (Not Rated), and IIFL Samasta (Unlisted) to provide a comprehensive overview of the NBFC-MFI sector..Click on the attachment to read the full report:.What Accenture's Q4 Result Means For Indian IT Companies — Read Motilal Oswal's Report.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Fusion Gets 'Buy' Upgrade From Motilal Oswal, Spandana Downgraded To 'Neutral' In MFI Space — Here's Why

Motilal Oswal reiterates Buy rating on CreditAccess Grameen - check target price.

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