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Revenue
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reported change
EBITDA
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Where this quarter sits.
Quarter read
What the record says.
Fusion Finance returned to profitability in Q3 FY26 with a PAT of ₹14 crore, driven by broad-based improvements in asset quality, collections, and credit cost. Disbursements rose to ₹1,594 crore (up from ₹1,098 crore QoQ), aided by a pre-approved customer base with ~50% approval rates. Collection efficiency reached 99.4% in December, with net forward flow rate at 0.25%. Management guided for AUM to cross ₹10,000 crore by FY27, with stable credit costs of 3.25-3.75%. Risks include potential over-leverage in the MFI portfolio and execution challenges in scaling MSME lending.
Colored figures show movement against the previous available record.
Guidance to track
- Management outlined a roadmap to cross ₹10,000 crore in AUM by FY27, leveraging existing infrastructure and branch network.
- On a stable book, credit costs are expected to normalize in the range of 3.25% to 3.75%, based on current flow rates and leverage trends.
- Targeting ₹50 crore per quarter in recoveries from the 60+ DPD pool, with ₹200 crore expected over the next four quarters.
- MSME AUM expected to grow from ~₹700 crore to ~₹1,500 crore, representing 15% of total AUM, with secured lending at 55% LTV.
Risks flagged
- Despite improvement, 7% of customers still have exposure to more than 3 lenders, posing risk if industry stress re-emerges.
- MSME book is set to double; any underwriting slippage or collateral valuation issues could impact asset quality.
- Management was non-committal on when the ₹380-400 crore DTA would be recognized, deferring to 'due course'.
- Cost-to-income ratio at 69% remains elevated; management expects gradual improvement but no specific timeline.
Key quotes
- We have returned to profitability this quarter delivering a PAT of 14 crores.
- Our auditors have confirmed that the earlier emphasis relating to going concern is no longer relevant.
- We are confident that on the stable book, the credit costs will be in the range of 3.25 to 3.75%.
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