Fusion Finance (FUSION) Q3 24/25 earnings summary

Executive summary

• Proactive measures and tighter underwriting since FY25 improved business and portfolio quality, with visible gains in collection efficiency and asset quality.

• Customer deleveraging is evident, with 80% of clients having exposure to two or fewer lenders, reducing risk from regulatory guardrails.

• MSME vertical is growing steadily, with 85% of its INR 630 crore AUM in secured loans and ongoing technology investments.

• Rights issue of ₹800 crore is progressing, with strong capital adequacy and liquidity positions.

• Covenant waivers obtained for ~80% of borrowings, future-proofing the balance sheet despite profitability impact.

Financial highlights

• AUM at ₹10,599 crore as of December 2024, down 0.88% YoY and 8% QoQ due to stricter underwriting.

• Total income for Q3 FY25 was ₹483 crore, down 21% YoY; net interest income at ₹223 crore, down 34% YoY.

• Pre-provision operating profit at INR 646.36 crore as of December 2024; PPOP for Q3 FY25 at ₹65 crore, down 75% YoY.

• Net loss of ₹719 crore for Q3 FY25, mainly due to deferred tax asset reversal and higher provisions.

• Collection efficiency improved to 97.7% in December 2024 from 96.1% in Q2 FY25.

Outlook and guidance

• Stabilization is expected from Q1 FY26, with cautious optimism and a focus on prudent growth.

• Disbursement growth likely to resume after 1-2 quarters, once new processes and team stability are achieved.

• Management expects continued improvement in collection efficiency and credit costs due to proactive risk management.

• Rights issue and strong CRAR support future capital needs.