1. At a Glance
Fusion Finance is currently trading at ₹190, with a market cap of ₹3,066 crore, a price-to-book of 1.61x, and a debt-to-equity of 2.57x. Sounds like a regular microfinance stock? Not quite.
This is a company that made ₹505 crore PAT in FY24, then promptly face-planted into a ₹1,225 crore loss in FY25, and has now crawled back with a ₹14 crore PAT in Q3 FY26. ROE is sitting at a stomach-churning -54.5%, ROCE is -2.96%, and yet the stock is up ~12% in 3 months.
Fusion’s AUM peaked at ₹11,476 crore, then shrank violently as asset quality exploded. GNPA went from 2.89% (Mar 2024) to 12.58% (Dec 2024) before cooling to ~4.6% by Sep 2025. This is not a gentle cycle — this is a washing machine on turbo mode.
So the real question:
👉 Is Fusion healing… or just heavily medicated by provisioning and rights issue money?
2. Introduction – From Darling to Disaster to “Maybe Okay?”
Fusion Finance used to be the poster child of fast-growing, institutionally loved microfinance NBFCs. High NIMs, aggressive expansion, Warburg Pincus pedigree, and an IPO narrative that screamed “scale meets inclusion”.
Then FY25 happened.
Collections slipped. Customers were reclassified. Provisions exploded. Financing profit went negative. GNPA numbers started looking like a phone number. By December 2024, GNPA hit 12.58% and EPS collapsed to -₹44.38.
FY25 ended with:
- Revenue: ₹2,320 crore
- PAT: -₹1,225 crore
- ROE: -55%
That’s not a bad year. That’s a regulator-worrying year.
Now cut to Q3 FY26:
- PAT: ₹14 crore
- Financing margin
- back to +2%
- GNPA trending down
- ₹800 crore rights issue completed
- CRAR at a comfy 38.8%
So yes, Fusion is alive. But is it healthy?
3. Business Model – WTF Do They Even Do?
Fusion is a systemically important NBFC-MFI, meaning:
- It lends small-ticket loans
- To women borrowers
- In Joint Liability Groups (5–7 members)
- With mutual guarantees
- Repayments every 14 or 28 days
Interest rates range from 19.15% to 23.40% (reducing balance) — which looks high until you remember the cost of last-mile rural credit delivery.
Vertical Breakdown
1) Microfinance MSME Loans
This is the bread, butter, and pressure cooker. Small loans to low-income women entrepreneurs. High yield, high risk, emotionally resilient borrowers… until macro stress hits.
2) MSME Loans
Fusion’s attempt to grow up. Loans to the “missing middle” for working capital and solar rooftops. Lower yield, theoretically better credit quality, still tiny compared to MFI book.
Geography
- 453 districts
- ~22 states
- 1,297 branches
- 94% rural
Top 5 states contribute ~70% of revenue, which means concentration risk is very real.
👉 Question: Is Fusion diversifying fast
