Fusion Microfinance shares plummeted by 5% to hit the lower circuit after brokerage firm CLSA downgraded its target price to ₹155 from ₹260, citing higher-than-expected losses and operational difficulties.
CLSA has given the stock an “Underperform” rating following the company’s Q2FY25 results, where Fusion reported a ₹305 crore net loss, driven by elevated credit costs of 28.6%, surpassing the management’s guidance.
The company is facing increased challenges, including rising gross and net non-performing assets (GNPA and NNPA) and a recent downgrade by CARE Ratings, which led to breaches in lender covenants. Despite these issues, Fusion Microfinance has taken measures like tighter underwriting standards and accelerated provisions. Management has secured waivers from lenders for the year and is focused on raising capital through a rights issue in CY24 as part of its recovery plan.
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