Fusion Finance Ltd

Price story Before the numbers, the tape. A stock price moves through four repeating seasons: a flat base (stage 1), an advance (2), a top (3), a decline (4). Where the price sits in that cycle frames everything below.

Fusion Finance Ltd trades at ₹190, in a confirmed uptrend and 11 weeks into that stage. That is −0.7% against its own 200-day average. It sits at 52% of a 52-week range of ₹141 to ₹234. On relative strength it has been ahead of the NIFTY 500 on a trailing-13-week view for 17 straight weeks.

Today the stock is in a confirmed uptrend — week 11 of stage 2, confirmed. At ₹190 it trades −0.7% versus its 200-day average and sits at 52% of its 52-week range (₹141–₹234).

Against the market, two honest reads. Cumulative: over the last 3.8 years the stock moved −42% while the NIFTY 500 moved +47% — behind the index over the full window. Recent form: on a trailing-13-week view the stock has been ahead for 17 straight weeks — the ribbon below is that same metric, week by week.

What would end the trend, mechanically: two Friday closes in a row below the 200-day line. That is the exit rule — no debates.

Story check

Fusion Finance Ltd's story is not scored yet against the markers our research file set on 19 July 2026. Where it sits in its own cycle: Not stated in the research file. Our fortnightly research layers last read it on 19 July 2026.

Our read, 19 July 2026. Fusion Finance is exiting a catastrophic NPA cycle with credit quality inflecting, book rebuilding at 10,000 Cr AUM target, and P/BV at 32nd percentile — but DTA-boosted Q4 PAT and three sequential leadership changes make the 'recovery confirmed' narrative premature.

What is proven. Fusion Finance is exiting a catastrophic NPA cycle with credit quality inflecting, book rebuilding at 10,000 Cr AUM target, and P/BV at 32nd percentile — but DTA-boosted Q4 PAT and three sequential leadership changes make the 'recovery confirmed' narrative premature.

What is not proven yet. Two consecutive quarters of GNPA deterioration from the current 3.21% base, OR management failing to execute the 10,000 Cr AUM target by more than 15% by March 2027 with no concall explanation, would invalidate the recovery thesis and make the P/BV premium unjustifiable.

🚨 What would change our mind. Two consecutive quarters of GNPA deterioration from the current 3.21% base, OR management failing to execute the 10,000 Cr AUM target by more than 15% by March 2027 with no concall explanation, would invalidate the recovery thesis and make the P/BV premium unjustifiable.

Layer 1 read, 19 July 2026 — KEEP. Real four-quarter MFI credit turn at a still-compressed P/BV, but only innings-2 with DTA-flattered profit and shaky management. Bad-loan ratio (GNPA) fell four straight quarters from 12.58% to 3.21% while the stock returned to profit, yet P/BV is still only 1.49x (32nd percentile) and price is up just 18% in a year — the earnings turn is real and not yet re-rated. But the recovery is young: reported Q4 profit of 114 Cr was flattered by a 76.8 Cr one-off deferred-tax credit, leaving core profit of only 37.5 Cr, and the underlying return on equity is still ~1%. Management has reversed credit-cost guidance three times and branch strategy once across four calls, so the priced-in recovery to a 10-12% ROE is a promise, not a delivery.

What would change Layer 1’s mind. Two consecutive quarters of GNPA ticking back above 5% from the current 3.21% base, OR Q1 FY27 PPOP falling below the Q4 FY26 level of 93 Cr (contradicting management's explicit PPOP-growth commitment) — either would break the 'credit turn is durable' thesis and turn the compressed-P/BV setup into the classic loss-making-MFI value trap.

Layer 2 read, 19 July 2026 — BENCH. Real MFI asset-quality repair, but earnings are DTA-flattered and unproven - hold, don't chase yet. Fusion's book is genuinely being cleaned - GNPA fell four straight quarters 12.58%->3.21% with forward flows sub-0.1%, and the multiple is still compressed at 1.49x P/BV (32nd pctile). But the recovery is innings-2: reported Q4 PAT of 114 Cr is flattered by 76.8 Cr of one-off DTA, leaving core PAT at just 37.5 Cr and ROE near 1%, while revenue is still contracting -27.8% and management has revised credit-cost guidance three times. Genuine inflection blocks a DROP; the unproven, DTA-boosted earnings base blocks an ADVANCE.

What would change Layer 2’s mind. A clean Q2 FY27 print showing core (ex-DTA) PAT scaling with GNPA holding at/below 3.21% and disbursements above 550 Cr/month, plus a satisfactory explanation of the promoter stake reduction, would flip BENCH->ADVANCE. Conversely GNPA deteriorating for two quarters from 3.21% would flip toward DROP.

The test written in advance. Two consecutive quarters of GNPA deterioration from the current 3.21% base, OR management failing to execute the 10,000 Cr AUM target by more than 15% by March 2027 with no concall explanation, would invalidate the recovery thesis and make the P/BV premium unjustifiable. — the thesis as written as stated by the next result.

The test written in advance. Management Credibility and Leadership Instability — Management Credibility and Leadership Instability by the next result.

The test written in advance. Promoter Stake Dilution — Promoter Stake Dilution Any further promoter stake reduction below 50% without a concurrent capital event would be a material negative signal. by the next result.

What the company does. Fusion lost 1,200 Cr in FY25 as its MFI loan book collapsed under over-leveraged borrowers. Credit metrics have turned four consecutive quarters — GNPA fell from 12.58% to 3.21%, collections at 99.7%, disbursements 34% up QoQ in Q4. The price has moved 18% in 12 months off a trough P/BV of 0.9x, but core PAT in Q4 was only 37.5 Cr (ex-DTA) and two of five FY26 loss quarters carried impairment flags, making this innings-2 not innings-5.

🚨 What the surface reading misses. The surface reading is: GNPA at 3.21% — improved from trough, but still elevated vs. pre-stress levels of 2-3% The research reads it further: The improvement spans four consecutive quarters (Dec 2024: 12.58 → Mar 2025: 7.92 → Jun 2025: 5.43 → Sep 2025: 4.61 → Dec 2025: 4.38 → Mar 2026: 3.21) with forward flow rates below 0.1% net — this is not a provisioning-mask cleanup but an underlying asset quality stabilization driven by tighter underwriting and improved collections infrastructure

🚨 What the surface reading misses. The surface reading is: 61 Cr equity capital increase — share count rose materially, diluting EPS recovery The research reads it further: The rights issue was 99% subscribed at 390 Cr per C037, meaning promoters participated. The equity capital increase from 101 to 162 Cr implies approximately 61 Cr face value of new shares — at Rs 10 face value that is approximately 6.1 Cr new shares. This dilutes the EPS per share but does NOT represent promoter exiting at market price. The promoter percentage decline from 57.71% (Dec 2024) to 54.55% (Mar 2026) is explained by this dilution mechanism, not market selling.

Lever 16 · Asset quality — BUILDING. Quarterly credit cost fell from approximately 571 Cr (peak) to 56 Cr in Q4 FY26 — each 100 Cr reduction flows directly to PAT for a lender of this size. What proves it keeps working: Credit Cost Normalization.

Sources: our stock research file (19 July 2026) · quarterly results through Jun 26 · the company’s own earnings calls. The story check is re-scored every results season; the record below never changes.

Revenue For a bank, revenue is everything the franchise earns — interest on the loan book plus fee and other income.

Fusion Finance Ltd reported ₹458 Cr of income in the Jun 26 quarter, +3.6% year on year. Over 8 years it has compounded at 26.1% a year. The last full year, FY26, came in at ₹1,699 Cr. The last four reported quarters add to ₹1,699 Cr.

FY26 revenue came in at ₹1,699 Cr (−27.5% on the year), capping 8 years at 26.1% compound. The latest quarter (Jun 26) printed ₹458 Cr, +3.6% year on year.

Pace check: the last four quarters averaged −14.9% growth against the decade's 26.1% — the current year is running slower than its own long-run rate.

Acceleration check: trailing-twelve-month revenue grew −18.1% over the last 4 quarters against −17.1%/yr over the last 8 — stabilising.

FY26-Q4. revenue ₹424 Cr and profit ₹114 Cr as reported.

FY27-Q1. revenue ₹458 Cr and profit ₹62 Cr as reported.

Why-sources: our stock research file (19 July 2026) and the company’s own results for those quarters.

Net margin Net margin — what the bank keeps of every ₹100 of revenue after every cost, provision and tax. It is the cleanest single margin we can read for a lender.

Fusion Finance Ltd's net margin is 13.5% in the Jun 26 quarter, +34.3 percentage points against the same quarter a year ago. Across 9 fiscal years the net margin has ranged −52.3% to 22.2%. The current quarter sits inside that band.

Why this happened. Marginal cost of borrowing improved 60 bps QoQ to 10.8% in Q4 FY26, with 11 new lenders onboarded and private bank share rising from 36% to 42%.

The latest quarter's net margin is 13.5%, +34.3 pp against the same quarter a year ago. Across 9 fiscal years the net margin has ranged −52.3%–22.2%.

Why: the numbers show the net margin move clearly, but the cost lines behind it sit below what we hold — so we state the move without inventing its driver.

FY26-Q4. revenue ₹424 Cr and profit ₹114 Cr as reported.

FY27-Q1. revenue ₹458 Cr and profit ₹62 Cr as reported.

Why-sources: our stock research file (19 July 2026) and the company’s own results for those quarters.

Net profit Net profit is what survives every cost, interest and tax — the number EPS, dividends and book value all grow from.

Fusion Finance Ltd earned ₹62.0 Cr of net profit in the Jun 26 quarter. Full-year FY26 profit was ₹14.0 Cr. That is 13.5% of the quarter's revenue. The same quarter a year earlier lost ₹92.0 Cr. 6 of the last 12 reported quarters were loss-making.

Jun 26 profit was ₹62.0 Cr, null year on year. On the full year, FY26 printed ₹14.0 Cr (null).

FY26-Q4. revenue ₹424 Cr and profit ₹114 Cr as reported.

FY27-Q1. revenue ₹458 Cr and profit ₹62 Cr as reported.

Why-sources: our stock research file (19 July 2026) and the company’s own results for those quarters.

Asset quality — the ladder Gross NPA is the slice of the loan book where repayments have stopped. Net NPA is what remains after the money already set aside against those loans. Falling is healing; rising is damage arriving.

Fusion Finance Ltd's gross NPA is 2.51% of the loan book in Jun 26, down from 5.43% a year ago. Net of provisions already set aside, 0.47% remains. That is the 6th straight quarter of improvement. Across the 12 quarters held here the book has ranged 2.51% to 12.58%.

Why this happened. The NPA cycle peaked at GNPA 12.58% in Dec 2024. By Mar 2026, GNPA was 3.21% per C001, and quarterly credit cost was 56 Cr per C017, down from 178 Cr in Q1 FY26. Management guided credit cost to stabilize at 2.5% of average book per C018, versus the 3.25-3.75% through-cycle guidance given in Feb 2026 — the revision is itself a signal of portfolio quality improvement. Forward flow rate from the current bucket was 0.03% in Q4 FY26 and sub-0.1% in April-May 2027, per C002.

Jun 26: gross NPA at 2.51% and net NPA at 0.47%, against 5.43% / 0.19% a year ago. Over the 12 quarters we hold, the book's worst reading was 12.58% and its best is 2.51% — which is the current print. The ladder has now improved for 6 consecutive quarters.

The synthesis: profit growth at a bank is only as good as the book behind it, and this book is healing on a multi-quarter streak. A note on depth: quarterly provisioning detail is not in our numbers yet, so this ladder reads levels and trend, not the cost of the cleanup.

Why the ladder moved: recoveries, write-offs and slippages each play a part, and that split sits below what we hold — the numbers show the healing; the driver mix does not travel with them.

The loan book We read the loan book through revenue — when the book grows, revenue grows with it. It is a rough proxy, and we say so: rate moves and fee swings can shift it a few points in any one year.

Fusion Finance Ltd's revenue grew −27.5% in FY26 to ₹1,699 Cr, so the book is flat. The latest quarter ran +3.6% year on year. The net margin on that income is 13.5%, +34.3 percentage points against a year ago. Interest income is a proxy for the book; rate moves can shift it a few points in any one year.

Why this happened. The loan book contracted from approximately 12,000 Cr (pre-stress peak) to trough as the company managed asset quality. Disbursements have re-accelerated: Q1 FY26 was 950 Cr per C019, Q3 was 1,594 Cr per C020, and Q4 was 2,140 Cr per C021. AUM at March 2026 was 7,400 Cr per C022. April 2027 disbursements were 625-650 Cr, only 4-5% below Q4 vs the usual 10-15% seasonal decline, per C023. The 10,000 Cr target requires average monthly disbursements of approximately 720 Cr through FY27 — roughly the January run-rate already achieved per C024.

FY26 revenue was ₹1,699 Cr, −27.5% on the year, and the latest quarter ran +3.6% year on year. The net margin on that revenue is 13.5% this quarter (+34.3 pp YoY) — growth with a widening margin on it.

The synthesis: a lender compounds when the book grows while the margin holds and the loan book stays clean — gross NPA is the loan-quality read we carry here.

Returns on equity and assets Two numbers rate a bank: ROE — what it earns on shareholder money — and ROA — what it earns on everything it deploys. ROE above ~13–15% earns its keep; below that, growth builds book slowly.

Fusion Finance Ltd earns a return on equity of 1% in FY26. Its trough over the ladder below was −55% in FY25. For a lender the balance sheet is the operating asset, so equity return and asset return have to be read together.

FY26 ROE came in at 1%, recovered from a FY25 trough of −55%. Return on assets is withheld on this page — its two source series disagree for this quarter. That return is below the bar a bank must clear to compound book value quickly — which is also the honest reason the stock trades where it does.

Why: the ROE ladder shows the move; the deposit-cost and provisioning drivers behind it sit below what we hold.

The quarterly return-on-equity and return-on-assets curves, which only the second data source carries, are not drawn on this page: its two data sources disagree by up to 4.9% on reported income across 14 comparable periods. A figure two sources cannot agree on is not drawn — the gap is a decision, not missing data.

Debt

For a bank, borrowings are raw material, not a warning sign — solvency is read through the returns and the loan book. A manufacturer’s debt is a claim against its profits, so the debt-to-equity lens that works everywhere else misleads on a lender and is not applied here.

A manufacturer’s debt is a claim against its profits; a bank’s borrowings are its inventory — money taken in to be lent out. The debt lens that works everywhere else misleads here, so this page does not apply it. The solvency questions for a bank — is the loan book sound, is the equity earning — are read through the loan-book and returns sections above.

Ownership Who owns the stock, quarter by quarter: promoters (the controlling owners), foreign and domestic institutions, and the public. Steady accumulation by people close to the numbers is a signal; a quiet register is also an answer.

Domestic institutions cut 7.5 points of Fusion Finance Ltd over 8 quarters, the biggest move on the register. That takes domestic institutions to 15.3% of the company. Promoters moved −3.7 points over the same window, to 54.0%. The register is read on the four disclosed classes only; nothing is inferred between filings.

The register over the last two years — Domestic institutions: −7.5 points over 8 quarters to 15.3%; Promoters: −3.7 points over 8 quarters to 54.0%; Foreign institutions: +0.8 points over 8 quarters to 4.8%.

🚨 Why the register moved: domestic institutions drove it (−7.5 points), alongside promoters (−3.7 points) — distribution into the market’s bid.

Safety line The Z-score estimates how far a company sits from balance-sheet distress — above roughly 3 is safe, below roughly 1.8 is the danger zone. It was built for manufacturers, so it is not applied to banks and lenders.

Fusion Finance Ltd: the Z-score is omitted — it was built for manufacturers, not banks, and applying it here would be theatre. The Z-score was built for manufacturers and is not applied to banks and lenders, so solvency here is read from the capital and asset-quality lines instead.

The safety line in one sentence: the Z-score is omitted — it was built for manufacturers, not banks, and applying it here would be theatre.

Valuation For a bank we price the book, not the earnings: P/BV is what the market pays for each ₹1 of the bank's net worth. A bank below 1× book is priced below the value of what it owns, net of what it owes.

Fusion Finance Ltd trades at 1.3× P/BV, near the bottom of its own range — cheaper only 21% of the time. Its long-run median P/BV is 1.7×, measured across 3.6 years of weekly readings. This places the multiple against the stock’s own record, and says nothing about what the business is worth.

Today's P/BV of 1.3× is near the bottom of its own range — cheaper only 21% of the time, against a long-run median of 1.7× measured over 3.6 years of weekly readings. This is a comparison against the stock's own history — not a claim about what it is worth.

The honest context for that discount: a bank earning about 1% on its equity is worth less per rupee of book, and the market has priced that in rather than overlooked it. The discount closes only if the returns themselves improve.

The price move, decomposed: over 3y, of the −31.8%/yr price move, ~+3.5%/yr came from book-value growth and ~−35.3 pp from the multiple (compressing). The split is the honest approximate (price return minus book-value growth); it makes the rally itself visible instead of hiding it behind the percentile.

Put together: the multiple is low against its own past, so the story rests on the book-value line underneath it, not the multiple.

The PEG ratio and its quarterly curve, which only the second data source carries, are not drawn on this page: its two data sources disagree by up to 4.9% on reported income across 14 comparable periods. A figure two sources cannot agree on is not drawn — the gap is a decision, not missing data.

Stage: No read Every business sits somewhere on a fundamental arc, and this page names the spot before anything else. The last twelve quarters of revenue, profit and EPS growth — plus the return the business earns on its capital — are read as curves: Deteriorating (the curves are falling), Turning around (a trough has just formed and the last few quarters lift off it), Improving (the climb off the trough is sustained), Consistent (steadily positive with healthy returns), Topping out (still high but decelerating from the peak). When the curves genuinely disagree the read is Mixed; too little history is No read. CAGR (compound annual growth rate) is the smooth yearly pace that turns the starting value into the latest one — the fairest way to compare growth across different time spans. Read the columns together: if the 1-year number towers over the 10-year, recent growth is running hotter than the long-run trend. A dash means that window is not held, or the base year was a loss (where a growth rate is not meaningful).

Fusion Finance Ltd reads as no read on its fundamental arc. Under eight usable quarters on the growth trio — not enough history for an honest trajectory read. The read is built from 8 quarters across 2 curves, on partial evidence.

Why it matters: with too little history, an honest page says so instead of guessing a trajectory.

One or more growth curves carry a base-effect spike — a large year-on-year move off a near-zero or loss-making comparable quarter. Those spikes are capped before the classifier reads the trajectory, and shown pinned on the chart, so a single distorted quarter does not drive the stage call.

Return readings here are annual, not quarterly — read as level and direction only; they can confirm the growth curves but never drive the stage on their own.

Fewer than eight usable quarters on the growth curves — this page will not guess a trajectory from a stub of history.

4-Factor Sector Score

39.5/100 — rank 6 of 7 in Finance & Investments - Microfinance · 71% evidence confidence

Fusion Finance Ltd scores 39.5 out of 100 against the 7 companies it is compared with in Finance & Investments - Microfinance, ranking 6. Balanced evidence: keep at normal research priority and require another comparable period before raising conviction.

The four contributions add to the total exactly: 17.4 + 11.4 + 3.2 + 7.5 = 39.5. This is the SAME number shown on the sector comparison — it is computed once, for the whole peer set, and read here.

What would change it: The read weakens if ROA rolls over or gross NPA rises while sector-relative strength deteriorates.

Said versus delivered

What Fusion Finance Ltd's management promised, set against what actually arrived — 4 tracked promises on the record. Read straight from the company’s own earnings calls. A promise that slipped stays on this page after it is met.

Credit Cost Expectation Lowered Without Full Reconciliation · 10 August 2026. The Feb 2026 call gave a 3.25%-3.75% stable-state credit-cost range, while the May 2026 call still described 3.25%-3.75% long-term MFI guidance and a 2.5% internal model. The Aug 2026 call now places the expectation closer to 2%, but does not clearly reconcile whether this is a temporary current-year outcome or a replacement for the prior steady-state framework.

Branch Network Plan Reduced · 10 August 2026. May 2026 described consolidating a pool of 200 branches and adding 70-100, implying a net reduction of about 100. Aug 2026 instead described about 100 closures and 50-60 openings, implying a net reduction of 40-50, without explaining whether the scope changed or why the previously stated plan was materially revised.

OPEX Outlook Reversed · 10 August 2026. May 2026 indicated an annual OPEX increase of roughly 5%-6%, whereas Aug 2026 targeted at least a 2%-3% reduction against the AOP. Although the latest call attributed the improvement to branch rationalization and other measures, the May call had already said that an OPEX rationalization project and branch rationalization were underway, so management did not adequately explain the magnitude of the reversal.

🚨 60-plus Recovery Run-rate Below Prior Target · 10 August 2026. The Feb 2026 call targeted INR 50 crore of 60-plus recoveries per quarter, or approximately INR 200 crore over the following four quarters. The Aug 2026 call reported quarterly recoveries of upwards of INR 35 crore, a materially lower run-rate, without stating whether the prior target had been withdrawn or explaining the shortfall.

Every quote above is taken word for word from the company’s own earnings calls.

Frequently asked questions