Fusion Finance Q4 FY26 Earnings Analysis

- Fusion Finance targets significant growth in its loan book, aiming to increase from approximately INR 7,200-7,300 crore to around INR 10,200 crore (about 40% growth) over the next year. - MSME loan book is expected to nearly double from INR 720 crore to INR 1,500 crore, focusing on secured lending with low risk (LTV around 55%). - MFI book is anticipated to grow from INR 6,400 crore to INR 8,600 crore, driven by existing infrastructure utilization rather than new setup. - About 15% of the total INR 10,000 crore AUM will be MSME loans, differentiating through lower credit costs and secure collateral. - Disbursement pace remains strong, with January disbursements at around INR 670 crore from over 110,000 customers. - Growth is seen as a reinstatement of existing capacity rather than aggressive expansion, leveraging stable operational teams and infrastructure.

- Fusion Finance targets crossing INR 10,000 crore in AUM in FY27, indicating significant growth. - Growth is driven by nearly doubling the MSME book (INR 720 crore to INR 1,500 crore) which carries lower risk due to secured loans. - MFI portfolio growth from INR ~6,400 crore to INR 8,600 crore is expected, though some of this is reinstating existing infrastructure rather than pure growth. - Operating cost ratios are expected to stabilize as portfolio growth resumes. - Pre-provisioning operating profit for Q3 was INR 94 crore, demonstrating earning strength; adjusted for one-time charges, profitability is higher. - Credit costs projected to be in 3.25%-3.75% range on stable book, with ongoing focus on cost optimization. - With strong capital adequacy (~39%) and liquidity (~INR 1,800 crore), Fusion is well positioned for growth without strain. - Expected continued improvement in margins and profitability supported by improving asset quality and lower income reversals.

- Fusion Finance is upgrading its Loan Origination System (LOS) and Loan Management System (LMS) to modern platforms. - This technological upgrade is targeted for completion by May 2026. - The modernization aims to improve front-end execution, reduce operational friction, provide real-time visibility into operational gaps, and support Joint Liability Group (JLG) operations more effectively. - The upgraded systems will reduce frontline workload by shifting heavy lifting from field officers to technology. - No specific mention of other capital expenditures or strategic investments was provided in the document.

- Fusion Finance has raised INR 2,127 crore during the first 9 months till December '25 through term loans (INR 1,347 crore), direct assignment (INR 434 crore), NCDs (INR 310 crore), and PTCs (INR 37 crore). - The company has comfortable liquidity of about INR 1,783 crore as of December and sanctions in hand of INR 1,825 crore, available for drawing at any time. - Capital adequacy stands at 38.8%, showing good headroom for growth without needing immediate capital raising. - Rights issue received a robust subscription with INR 395 crore collected against the INR 400 crore issue size (~99% subscription). - Management indicates strong lender confidence, with many banks freshly engaging and waiver coverage at 97%. - No explicit mention of any future planned fundraising through debt or equity during the call; current sanctions and liquidity position are deemed sufficient for growth plans.

- Fusion Finance is targeting to cross INR 10,000 crore in AUM by FY27. - Current AUM at the end of the last fiscal year is approximately INR 7,200-7,300 crore. - The growth from around INR 7,000 crore to INR 10,200 crore implies about 40% growth. - MSME book is expected to almost double from INR 720 crore to INR 1,500 crore. - MFI book expected to rise from approximately INR 6,400 crore to INR 8,600 crore. - January disbursements stood at around INR 670 crore from approximately 1,10,000 customers. - There is a significant focus on increasing disbursement and utilizing existing infrastructure rather than expanding branches. - Liquidity is comfortable with INR 1,783 crore available and sanctions of INR 1,825 crore in hand. - Fresh debt raised till December '25 is INR 3,940 crore supporting growth plans.