Fusion Finance Ltd. shares saw a significant recovery on Tuesday, climbing after experiencing a 10% slide in the previous session. Leading brokerages, including ICICI Securities and MOFSL, have issued 'Buy' recommendations for the stock, projecting potential upsides of up to 31%.
The non-banking financial company-microfinance institution (NBFC-MFI) has demonstrated a notable turnaround, shifting from a net loss in FY25 to profitability in FY26. A particularly strong performance in the second half of FY26 is seen as a foundation for robust growth in FY27.
Strategic Pivot Drives Financial Recovery
Fusion Finance recently broke a six-quarter streak of sequential assets under management (AUM) decline. This reversal was marked by disbursements reaching approximately Rs 2,140 crore against repayments of Rs 1,610 crore. This positive shift follows a management transition in March 2025, when Sanjay Garyali took the helm, initiating a comprehensive business model reset.
ICICI Securities highlighted that FY26 was a pivotal year for Fusion Finance, characterized by a strategic move towards acquiring higher-quality customers and building a more sustainable and scalable business model. The brokerage noted that normalizing credit costs to below 3% and improving overall asset quality suggest that the period of peak financial strain is now behind the company. ICICI Securities has set a target price of Rs 240 for the stock.
Brokerage Targets and Growth Projections
MOFSL also reiterated its 'Buy' rating for Fusion Finance, setting a target price of Rs 235. The brokerage confirmed that Fusion Finance's FY27 AUM target of Rs 10,000 crore remains intact. This target is expected to be achieved through a disciplined customer acquisition strategy, focusing on low-leveraged and stable borrower profiles.
The MSME (Micro, Small, and Medium Enterprises) portfolio is identified as a key growth driver. It expanded by 15% year-over-year, now contributing 10% of the total AUM, up from 7% in FY25. MOFSL expects further growth in this segment through deeper market penetration, increased focus on the Loan Against Property (LAP) segment, and expansion via new sourcing channels to enhance origination and reach.
MOFSL projects Fusion Finance to achieve an AUM Compound Annual Growth Rate (CAGR) of 25% over FY26E-28E, with a Return on Assets (RoA) of 3.8% and Return on Equity (RoE) of 13% by FY28E. On Tuesday, Fusion Finance's stock was trading 1.48% higher at Rs 185.55 on the BSE.