Fusion Finance Limited’s stock is trading at ₹192.49 on the National Stock Exchange (NSE).
This reflects a 1.98% increase over the past 24 hours. The company’s market capitalization stands at approximately ₹1,930 crore.
Recent Financial Performance
In the quarter ending September 2024, Fusion Finance reported a net profit of ₹133 crore, marking a 16% increase compared to the same period in the previous year.
This growth is attributed to an expansion in the company’s loan portfolio and improved asset quality.
Rights Issue Announcement
On December 4, 2024, the company’s board approved a proposal to raise up to ₹800 crore through a rights issue.
This move aims to strengthen the company’s capital base and support future growth initiatives. The rights issue is expected to be completed by the end of the first quarter of 2025.
Credit Rating Downgrade
Despite positive financial results, Fusion Finance faced a setback when Crisil Ratings downgraded its long-term bank loan facilities worth ₹8,000 crore to ‘A’ and placed them under rating watch.
The rating on its ₹50 crore commercial paper was also lowered to ‘A1’. Crisil cited concerns over the company’s asset quality and increased credit costs as reasons for the downgrade.
Analyst Projections
Analysts have set a median price target of ₹265 for Fusion Finance’s stock over the next 12 months, with estimates ranging from ₹155 to ₹520.
This suggests potential upside from the current trading price, though the wide range indicates varying opinions on the company’s future performance.
Industry Context
The microfinance sector in India has been experiencing challenges due to overleveraging of borrowers and increased competition. Fusion Finance’s recent capital-raising efforts and focus on improving asset quality are strategic moves to navigate this challenging environment.
Investor Considerations
Investors should monitor the company’s efforts to enhance its financial position, including the upcoming rights issue and strategies to address asset quality concerns. The recent credit rating downgrade highlights potential risks, making it essential for investors to stay informed about the company’s performance and industry dynamics.