Fusion Finance tumbles after recording loss of Rs 35 crore in Q1 due to high provisioning

Fusion Finance was locked in 20% lower circuit at Rs 346.80 after the company reported a net loss of Rs 35.62 crore in Q1 FY25 as compared with a net profit of Rs 120.46 crore in Q1 FY24.

Total income increased by 27.84% year-over-year (YoY) to Rs 706.68 crore during the quarter.

Disbursements increase by 30.73% YoY to Rs 2,986.65 crore in Q1 FY25. The companys borrower base as on 30 June 2024 stood at 39.5 lakh.

Net interest income (NII) rose by 34.85% to Rs 396.55 crore in Q1 FY25 from Rs 294.07 crore in Q1 FY24. Net interest margin (NIM) improved to 11.64% in Q1 FY25 from 10.89% in Q1 FY24.

Cost of fund declined to 10.09% in the June24 quarter from 10.57% recorded in the June23 quarter.

Pre-provision operating profit (PPOP) increased by 26.49% YoY to Rs 297.75 crore in Q1 FY25. Impairment of financial instruments added up to Rs 348.47 in the first quarter of FY25, which is sharply higher as compared with impairment charge of Rs 75.93 recorded in the same period last year.

Consequently, the company posted a pre-tax loss of Rs 50.72 crore in Q1 FY25 as against a pre-tax profit of Rs 159.46 crore posted in Q1 FY24. The company wrote-back taxes aggregating to Rs 15.10 crore during the period under review.

As on 30 June 2024, gross NPA stood at 5.46% while net NPA was at 1.25%. Gross NPA and net NPA were at 3.20% and 0.78%, respectively, as on 30 June 2023.

The companys capital adequacy position remained healthy, with CRAR of 25.86% as on 30 June 2024. Liquidity remained robust with cash and cash equivalents of Rs 1,590 crore, amounting to 12.98% of the total assets.

Devesh Sachdev, MD&CEO, Fusion Finance, said: Our AUM has grown consistently and we continue to add new customers in a calibrated manner. As an agile and prudent organization we consistently review our portfolio and we noticed delinquency trends in certain pockets due to over-leverage and external factors.

Due to which we have done early risk recognition and tightened our ECL model leading to higher than usual provisioning in this quarter that had an impact on our overall profitability. However, our pre provisioning profits (PPOP) have been in line with our consistent performance in the previous quarters and we expect to go back to our normal course in H2 FY25.

Our strong Balance Sheet with 25.86% CRAR underlines our robust business fundamentals and we are committed to follow a prudent path to ensure sustainable growth.

Fusion Finance (formerly Fusion Micro Finance Limited) is amongst Indias leading non-banking financial company-microfinance institutions (NBFC-MFIs). It is one of the youngest companies to be among the top NBFC MFIs in the country with an asset under management (AUM) of INR 12,193 crore. The company has been growing consistently with an extensive network of 1,398 branches spread across 22 states including 3 Union Territories, as of 30 June 2024.

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