🧠 At a Glance
Fusion Finance — a once-hyped NBFC-MFI — has turned into a loss-making horror story. FY25 saw a net loss of ₹1,225 Cr, qualified audit opinion, GNPA rising to 12.6%, and a P/BV of 1.84x. Promoters dumped 13% stake, and raised ₹800 Cr via a desperate rights issue. Everything that could go wrong… kinda did.
1. 🎬 Introduction with Hook
What do you get when you mix:
- ₹2,579 Cr market cap
- ₹1,225 Cr net loss in FY25
- Rights issue at fire-sale valuation
- GNPA of 12.6%
- Promoter exit
- SEVERE audit red flags
You get Fusion Finance Ltd — the microfinance NBFC that’s now giving max distress.
2. 🧵 WTF Do They Even Do? (Business Model)
- Core biz: JLG (Joint Liability Group) microloans to rural women in groups of 5–7
- Loan size: ₹25K–₹1L
- Tenure: 17–25 months
- Repayment: every 14–28 days
- Interest rates: 19.15–23.4% (reducing balance)
Also does:
- MSME lending, for small biz
- Productivity-linked loans (mobile phones, cycles etc.)
Distribution-led model with field agents, door-to-door collections, and last-mile credit delivery.
📉 But the repayment culture seems to have… well, vanished in FY25.
3. 📊 Financials – Profit, Margins, ROE, Growth
| Metric | FY24 | FY25 |
|---|---|---|
| Revenue | ₹2,317 Cr | ₹2,320 Cr |
| Net Profit | ₹505 Cr | ₹(1,225) Cr |
| Financing Margin | 25% | -50% |
| ROE | 20% | -55% |
| EPS | ₹31.17 | ₹(75.54) |
From profitable to panic-mode in 12 months.
4. 📈 Valuation – Is It Cheap, Meh, or Crack?
| Metric | Value |
|---|---|
| Price | ₹186 |
| Book Value per Share | ₹101 |
| P/BV | 1.84x |
| PE | N/A (loss) |
| ROE (TTM) | -55% |
| Market Cap | ₹2,579 Cr |
📉 Fair Value Range (Realistic):
Assuming FY26 turnaround to ₹200 Cr PAT and 1.5x P/BV:
₹200 Cr × 10–12 P/E = ₹2,000–₹2,400 Cr FV
Or ₹140–₹170/share range (vs ₹186 currently)
If stress continues → ₹80–₹100 range is also possible.
5. 🍲 What’s Cooking – News, Triggers, Drama
🔥 FY25 mess:
- ₹1,225 Cr annual net loss
- GNPA spiked to 12.6%, from 3.2% in FY24
- Qualified audit opinion – yes, auditor has doubts
- Going concern flagged
- ₹800 Cr rights issue (at fire-sale valuation) barely patched liquidity
👥 Management changes:
- CEO Devesh Sachdev replaced by Sanjay Garyali in March 2025
📉 Ratings downgrade:
- CRISIL, ICRA, CARE all issued negative outlooks
- Rights issue was subscribed, but only after pricing crash
6. 🧾 Balance Sheet – How Much Debt, How Many Dreams?
| Metric | FY24 | FY25 |
|---|---|---|
| Equity Capital | ₹101 Cr | ₹101 Cr |
| Reserves | ₹2,748 Cr | ₹1,543 Cr |
| Borrowings | ₹8,616 Cr | ₹6,402 Cr |
| Total Liabilities | ₹11,774 Cr | ₹8,293 Cr |
🧯 Reserves dropped by ₹1,200 Cr due to losses.
Borrowings cut by ₹2,200 Cr – likely via repayment + equity infusion.
7. 💸 Cash Flow – Sab Number Game Hai
| Year | CFO (₹ Cr) | CFI (₹ Cr) | CFF (₹ Cr) | Net Cash Flow |
|---|---|---|---|---|
| FY24 | ₹-1,350 | ₹31 | ₹1,843 | ₹524 |
| FY25 | ₹1,448 | ₹74 | ₹-2,214 | ₹-692 |
FY25:
- Rights issue added capital
- Borrowing reduced
- Negative net cash flow = liquidity crunch still exists
8. 📉 Ratios – Sexy or Stressy?
| Metric | FY25 |
|---|---|
| ROE | -55% |
| ROA | -12.2% |
| Gross NPA | 12.58% |
| Net NPA | 0.3% |
| Interest Cover | Low |
🧨 GNPA spiked from 2.89% → 12.58% in 1 year
That’s loan book gone rogue. A rare microfinance NPA disaster.
9. 💵 P&L Breakdown – Show Me the Money
| Metric | FY25 (₹ Cr) |
|---|---|
| Total Revenue | ₹2,320 Cr |
| Interest Cost | ₹844 Cr |
| Opex | ₹2,646 Cr |
| Operating Profit | ₹-1,170 Cr |
| Net Profit | ₹-1,225 Cr |
Translation:
Company earned revenue, but expenses ballooned, and provisioning exploded.
10. 📊 Peer Comparison – Who Else in the Game?
| Company | CMP | GNPA | ROE | P/BV | FY25 Profit (Cr) |
|---|---|---|---|---|---|
| CreditAccess Grameen | ₹1,297 | ~2.9% | 7.9% | 2.98 | ₹531 Cr |
| Muthoot Microfin | ₹152 | 9.4% | -8.2% | 0.99 | ₹-222 Cr |
| Fusion Finance | ₹186 | 12.6% | -55% | 1.84 | ₹-1,225 Cr |
| Spandana Sphoorty | ₹278 | 12.5% | -31% | 0.76 | ₹-956 Cr |
| Satin Creditcare | ₹165 | ~5.0% | 7.5% | 0.72 | ₹186 Cr |
✅ Fusion looks worse than everyone else in profit and asset quality.
11. 🕵️ Miscellaneous – Shareholding, Promoters
| Category | Mar 2023 | Mar 2025 |
|---|---|---|
| Promoters | 68.18% | 55.21% |
| FIIs | 5.98% | 2.59% |
| DIIs | 13.56% | 16.15% |
| Public | 12.0% | 25.83% |
📉 Promoters dumped 13%
📉 FIIs have exited slowly
📈 Public holding DOUBLED — classic signs of retail being used as exit liquidity
12. ⚠️ Red Flags Summary
- GNPA 12.6% = massive repayment problem
- Rights issue = dilution, panic mode
- Audit qualification + going concern doubts
- Sudden CEO change
- Promoter stake sale
- Operating margin collapsed to -50%
13. 🧑⚖️ EduInvesting Verdict™
“Pehle IPO, phir NPA, ab rights issue – Fusion has done the full NBFC bingo.”
This was once a fast-growing MFI with decent financials. But FY25 revealed structural cracks in asset quality, risk management, and cost control.
With microfinance sector stress, poor optics, and uncertain turnaround — investors must tread with maximum caution.
📉 Fair Value Range (Realistic Turnaround Case): ₹100–₹140
📉 Fair Value Range (Bear Case): ₹80–₹100
📌 Current Price: ₹186
⚠️ Too many red flags, too little clarity. For now, this is more “Fusion Confusion” than financial inclusion.
✍️ Written by Prashant | 📅 9 July 2025
Tags: Fusion Microfinance, Fusion Finance Ltd, NBFC MFI, NPA Crisis, Rights Issue, Devesh Sachdev Exit, Sanjay Garyali, Microfinance Stocks, EduInvesting
