CLSA has downgraded Fusion Micro Finance (Fusion Fin) to ‘Underperform’ from ‘Outperform’, slashing its target price (TP) to Rs 260 from Rs 550. The downgrade comes after Fusion Fin disclosed higher credit costs for Q2 FY25, raising concerns about the company’s collection efficiency.
According to CLSA, the dip in collection efficiency at the end of Q1 FY25 has shown no signs of improvement over the past two months. Additionally, the company is undergoing multiple process and leadership changes, which could add to the uncertainty in the near term.
Despite these challenges, CLSA noted that the company’s planned equity raise of Rs 5.5 billion is expected to be completed within the calendar year 2024. However, the brokerage remains cautious on the stock due to the rising credit costs and ongoing internal changes.
