Fusion Finance Ltd Q1 FY26 – ₹434 Cr Revenue, -₹92 Cr PAT, GNPA 5.4%: Microfinance Messiah or Titanic with Warburg on Board?
1. At a Glance
Fusion Finance, once marketed as a savior of rural women entrepreneurs, is now posting losses bigger than its loan tickets. Q1 FY26 saw revenue of ₹434 Cr but a loss of ₹92 Cr, GNPA at 5.43%, and a ROE of –55%. Borrowings of ₹6,402 Cr against equity of ₹101 Cr give it a debt-to-equity ratio of 3.9x—basically, they are running on borrowed oxygen cylinders. Warburg Pincus has a board seat, but right now even they must be wondering if they backed “Self-Help Groups” or “Self-Destruct Groups.”
2. Introduction
Imagine a Bollywood movie where the hero starts as Robin Hood, handing out small loans to rural women, but midway through, the villain—Non-Performing Assets—shows up and punches him into the ICU. That’s Fusion Finance’s FY25 and FY26 story.
For years, Fusion thrived on the JLG (Joint Liability Group) model: five women sitting together, co-signing each other’s ₹20,000 loans, and paying back every 14 days. Beautiful on paper, but when rural incomes stumble, the model collapses faster than a bad Netflix script.
FY24 still looked like a fairy tale: ₹505 Cr profit, NIM 11.2%, NNPA just 0.6%. But FY25 brought an audit-qualified ₹1,225 Cr loss and “going concern” doubts. That’s like going from winning Kaun Banega Crorepati to defaulting on your dish TV recharge in one season.
3. Business Model – WTF Do They Even Do?
Fusion Finance is basically the Flipkart of small loans:
Microfinance JLG Loans: 94% rural women, groups of 5–7, repayment every 2–4 weeks, interest rates of ~19–23%. Sounds like solidarity lending, but when one member defaults, the whole group’s “solidarity” vanishes faster than monsoon roads.
MSME Loans: Targeting the “missing middle.” Translation: borrowers too small for banks, too big for MFIs. They fund working capital, solar rooftops, or the occasional mobile phone.
Add-on Products: They’ve experimented with loans for cycles and mobile phones—turning into a “Bajaj EMI” for the underserved.
On paper, noble. In reality, if even 1% of their 3.8 million customers default, it can wipe off yearly profits. And spoiler alert: 55,000 customers already got reclassified into Stage-3 NPAs in Q1 FY25.
4. Financials Overview
Metric
Latest Qtr (Q1 FY26)
Same Qtr Last Yr
Prev Qtr (Q4 FY25)
YoY %
QoQ %
Revenue
₹434 Cr
₹688 Cr
₹466 Cr
-36.9%
-6.9%
Financing PBT
-₹92 Cr
-₹36 Cr
-₹165 Cr
-155%
44.2%
PAT
-₹92 Cr
-₹36 Cr
-₹165 Cr
-155%
44.2%
EPS (₹)
-5.69
-2.20
-10.15
-159%
44%
Commentary: Revenues are falling, provisions are rising, and PAT is consistently negative. EPS is negative for four straight quarters—basically, they’re paying shareholders in depression instead of dividends.
👉 Question: If every quarter is a loss, at what point do you stop calling it “quarterly earnings” and start calling it “quarterly bleeding”?
5. Valuation Discussion – Fair Value Range
This is tricky—valuing a loss-making NBFC is like valuing a leaking bucket.
P/B Method: Book Value = ₹101, CMP = ₹190 → P/B = 1.87. Peers like CreditAccess trade at 3–4×, but Fusion has –55% ROE. Reasonable range: 1.0–1.5× BV → ₹100–₹150.
P/E Method: EPS is –₹79, so P/E not meaningful. Let’s not insult maths.
