Shares of Fusion Micro Finance dropped 10% on Monday after Investec downgraded the stock from a ‘Hold’ to a ‘Sell’ rating, cutting the target price from ₹500 to ₹300 per share. The downgrade follows a profit warning that has raised concerns about deeper financial difficulties for the company.
Investec cited the risk of a potential credit rating downgrade, funding issues, and a shrinking loan book as major factors behind the move.
The brokerage also stressed the need for quick management changes and additional capital raising to address the company’s financial health.
Additionally, Investec has revised its profit after tax (PAT) estimates for Fusion Micro Finance, slashing projections for FY25 by 102% and FY26 by 22%. The company is also expected to make higher Expected Credit Loss (ECL) provisioning, potentially between ₹500-550 crore in Q2FY25, compared to ₹348 crore in the previous quarter.
As of 9:21 am the shares of Fusion Micro Finance were trading 8.33% lower at ₹281.00 on NSE.
