In Wednesday’s trading session, the shares of one of India’s leading Non-Banking Financial Company-Microfinance Institutions (NBFC-MFIs) hit a 20% lower circuit at Rs. 346.8 on BSE, after reporting Rs. 36 crore net loss in Q1 FY24-25 as compared to Rs. 120.5 crore profit a year ago.
With a market capitalisation of Rs. 3,503.5 crore, the shares of Fusion Finance Limited opened in the red at Rs. 346.8, as against its previous closing price of Rs. 433.5.
What’s the News:
The fluctuations in the share prices were observed after the company announced the financial results for Q1 FY24-25, through the recent filings with the stock exchanges on Tuesday post-market hours.
The total revenue from operations for Q1 FY24-25 stood at Rs. 688.3 crores, marking a 29.6 percent YoY rise from Rs. 531 crores in Q1 FY23-24, as well as a 6.5 percent growth quarter-on-quarter from Rs. 646 crores in Q4 FY23-24.
Fusion Finance’s net profit fell to a loss of Rs. 36 crores in Q1 FY24-25, as against Rs. 120.5 crores profit in Q1 FY23-24, while on a quarter-on-quarter basis, it declined from a profit of Rs. 132.7 crores in Q4 FY23-24.
Overall profitability was impacted leading to a loss of Rs. 36 crore due to higher than usual provisioning following a spurt in bad loans.
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Asset Under Management (AUM) grew by 25.5 percent from Rs. 9,711.75 crores to Rs. 12,192.58 crores, while disbursements increased by 30.7 percent YoY from Rs. 2,284.61 crores to Rs. 2,986.65 crores.
On a year-on-year basis, the company’s Net Interest Income (NII) increases by 34.8 percent from Rs. 294.07 crores to Rs. 396.55 crore, and Net Interest Margin (NIM) increases from 10.89 percent to 11.64 percent.
Fusion Finance is currently facing several challenges, including customer leverage, low centre meeting attendance leading to door-step collections, customer migrations, field attrition, and collection efficiency for Q1 at 96.3 percent including arrears.
To mitigate further declines in asset quality, Fusion Finance has stopped disbursements at 104 of its nearly 1,400 branches and has tightened the criteria for acquiring new customers.
Stock Performance
The shares of Fusion Finance Limited have delivered negative returns of nearly 41.5 percent in one year as well as around 40.8 percent negative returns year-to-date.
About the Company:
Founded in 2010, Fusion Finance Limited, formerly Fusion Micro Finance Limited, is primarily engaged in microfinance lending activities, providing financial services to poor women in India who are organised as Joint Liability Groups (JLGs).
Fusion Finance is a Non-Banking Financial Company-Microfinance Institution (NBFC-MFI) registered with the RBI that provides small value collateral-free loans, while also lending to MSME enterprises.
Written by Shivani Singh
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