Investec has downgraded Fusion Micro Finance from a ‘Hold’ to a ‘Sell’ rating, significantly reducing the target price from Rs 500 to Rs 300. The brokerage firm’s decision comes in the wake of a profit warning that signals deeper financial troubles for the company.
Investec expressed concerns that this profit warning could trigger a downward spiral for Fusion Micro Finance. The potential impacts include a credit rating downgrade, funding challenges, or a decline in the company’s loan book.
The brokerage firm emphasized the urgency for Fusion Micro Finance to take quick action, particularly in terms of management changes and raising capital.
In light of these developments, Investec has also revised its profit after tax (PAT) estimates for FY25 and FY26, cutting them by 102% and 22%, respectively.
