I-Sec upgrades Fusion Finance to Buy, target price revised to Rs 225

ICICI Securities has upgraded Fusion Finance to Buy from Reduce with a revised target price of Rs 225 (earlier Rs 160). The current market price of Fusion Finance is Rs 197.1. Fusion Finance, incorporated in 1994, is a Small Cap company with a market cap of Rs 2585.68 crore, operating in the NBFC sector.

Fusion Finance’s key products/revenue segments include Interest, Income From Financial Services, Income From Sale Of Share & Securities and Fees & Commission Income for the year ending 31-Mar-2024.

Financials
For the quarter ended 31-03-2025, the company has reported a Standalone Total Income of Rs 475.99 crore, down -1.35 % from last quarter Total Income of Rs 482.51 crore and down -29.50 % from last year same quarter Total Income of Rs 675.14 crore. The company has reported net profit after tax of Rs -164.56 crore in the latest quarter. The company?s top management includes Mr.Devesh Sachdev, Ms.Ratna Dharashree Vishwanathan, Ms.Namrata Kaul, Mr.Pankaj Vaish, Mr.Narendra Ostawal, Mr.Kenneth Dan Vander Weele. Company has S R Batliboi & Associates LLP as its auditors. As on 31-03-2025, the company has a total of 10 crore shares outstanding.

Investment Rationale
ICICI Securities notes that subdued AUM growth in H1FY26, rising borrowing cost and sticky operating cost (C-I ratio at ~70% in Q4FY25) would keep PPoP muted in the near-term; however, they believe stressed asset formation has peaked out and credit cost?s improving trajectory shall continue ahead. Early recognition of stress and accelerated provisions (>95% PCR on Stage-3 assets with NNPL at 0.30%, as on Mar?25), capital infusion via rights (proforma CRAR at ~30%+), X bucket CE increasing to 98.4% in Mar?25 (from 97.1% in Q3FY25) and gradual normalisation of disbursements over FY26 would enable recovery in earnings over FY26E?27E. Given inexpensive valuation (PBV at 0.9x FY27E BVPS) and encouraging signs of new initiatives yielding positive outcomes, the brokerage upgrades to BUY (Reduce earlier) with a revised target price of Rs 225 (earlier Rs 160), valuing the stock at 1.2x Sep-26E BVPS (earlier 0.6x Sep-25E BVPS). Promoter/FII Holdings
Promoters held 57.71 per cent stake in the company as of 31-Mar-2025, while FIIs owned 1.69 per cent, DIIs 16.91 per cent.