Fusion Finance falls after posting Rs 35 crore loss in Q1 due to high provisions

Last updated: August 7, 2024 | 11:31 AM IST

Fusion Finance closed 20 per cent lower at Rs 346.80 crore after the company reported a net loss of Rs 35.62 crore in Q1FY25 against a net profit of Rs 120.46 crore in Q1FY24.

Total income rose 27.84% year-on-year (YoY) to Rs 706.68 crore during the quarter.

Disbursements grew by 30.73% YoY to Rs 2,986.65 crore in Q1 FY25. The company’s borrower base as of June 30, 2024, stood at 39.5 lakh.

Net Interest Income (NII) increased by 34.85% to Rs 396.55 crore in Q1 FY25 from Rs 294.07 crore in Q1 FY24. Net Interest Margin (NIM) increased to 11.64% in Q1 FY25 from 10.89% in Q1 FY24.

The cost of the fund decreased to 10.09% in the June 24 quarter from 10.57% recorded in the June 23 quarter.

Pre-Provision Operating Profit (PPOP) increased year-on-year by 26.49% to Rs 297.75 crore in Q1 FY25. Impairment of financial instruments stood at Rs 348.47 crore in Q1 FY25, which is significantly higher as compared to the impairment charge of Rs 75.93 crore recorded during the same period last year.

As a result, the company reported a pre-tax loss of Rs 50.72 crore in Q1 FY25 as compared to a pre-tax profit of Rs 159.46 crore reported in Q1 FY24. The company has written off taxes totalling Rs 15.10 crore during the period under review.

As of June 30, 2024, the Gross NPA ratio was 5.46% and the Net NPA ratio was 1.25%. The Gross NPA and Net NPA ratios were 3.20% and 0.78%, respectively, as of June 30, 2023.

The company’s capital position remained healthy with CRAR at 25.86% as of June 30, 2024. Liquidity remained strong with cash and cash equivalents at Rs 1,590 crore, which was 12.98% of total assets.

Devesh Sachdev, Managing Director and CEO, Fusion Finance, said, “Our AUM has been growing steadily and we continue to acquire new clients in a calibrated manner. As an agile and prudent organization, we are constantly reviewing our portfolio and have noticed trends of delinquencies in some pockets due to excessive debt and external factors.

This enabled us to identify the risk early and tighten our ECL model, which led to higher than usual provisions in the quarter, which impacted our overall profitability. However, our earnings before provisions (PPOP) were in line with our flat performance in previous quarters and we expect a return to our normal rate in H2 FY25.

Our strong balance sheet with a CRAR of 25.86% underlines the solid foundation of our business. We are committed to pursuing a prudent path to ensure sustainable growth.

Fusion Finance (formerly Fusion Micro Finance Limited) is one of India’s leading non-banking financial institutions – microfinance institutions (NBFC-MFIs). It is one of the youngest companies to be ranked among the top non-banking financial institutions in the country, with assets under management (AUM) of INR 12,193 crore. The company has been growing steadily with a vast network of 1,398 branches spread across 22 states, including 3 union territories, as of June 30, 2024.

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First published: August 7, 2024 | 11:17 AM IST