Fusion Microfinance (NSE: FUSION) share has hit a lower circuit of 20 percent today August 7. Currently, the stock is trading at Rs 346.80 on BSE (₹346 on 7 August 2024).
With this decline, the stock has come to its 52-week low of Rs 346.80. The company has reported weak results in the first quarter of FY25.
After this news, selling was seen in the company’s shares today. With weak results, a brokerage firm has downgraded the stock.
With today’s decline, the company’s market cap has come down to Rs 3,503.51 crore.
Fusion Microfinance Quarterly Results
Fusion Finance reported a net loss of around 36 crore during June that ended and an income of Rs 120 crore during the same period in the year before.
Asset quality declined during the quarter. The company’s gross non-performing assets (NPA) rose to 5.46 percent from 2.89 percent in March.
Net NPA rose to 1.25 percent as compared to 0.6 percent in March.
Brokerage View On Fusion Microfinance
The brokerage has downgraded the stock to ‘Neutral’ with a target of Rs 440 for each share.
Fusion said that about 24 percent of its borrowers (as of March 2024) have MFI loans from five or more lenders.
The stress currently being seen in the sector is primarily due to high leverage by clients, low attendance at center meetings, exodus of clients, and field attrition.
The brokerage has stated that Although this is an ongoing situation they believe that the current stress in the sector because of high leverage on customers is more common across all geographical regions (rather than being a state-specific issue).
The security measures implemented by Fusion Microfinance will offset growth in the industry and could bring normality back to the collection of assets.
But this won’t happen until the current pressure in the sector eases. During this time the cost of credit will remain high, according to the brokerage.
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