Fusion Finance Turns Profit in FY26, But Revenue Dips and Covenants Breach

Fusion Finance Ltd announced its audited results for the fiscal year ending March 31, 2026, revealing a significant shift to profitability. The company reported a profit after tax (PAT) of ₹13.85 crore, a substantial recovery from the ₹1,224.54 crore loss recorded in FY25. While the company achieved this profit turnaround, total revenue from operations for FY26 decreased to ₹1,698.53 crore, down from ₹2,343.94 crore in the prior year.

Key Financials

The company officially released its audited financial statements for the fiscal year ending March 31, 2026. Key highlights include:

• Profit After Tax (PAT): ₹13.85 crore (FY26), a significant improvement from a ₹1,224.54 crore loss in FY25.
• Total Revenue: ₹1,698.53 crore (FY26), down from ₹2,343.94 crore in FY25.

The board also proposed the re-appointment of Mr. Sanjay Garyali as Managing Director & CEO and approved the allotment of 10,00,000 shares under its ESOP 2023 plan.

Implications of the Results

Achieving profitability marks a crucial positive step, suggesting better cost controls or stabilization after extensive provisioning in the previous year. However, the revenue shortfall and the revelation of breached financial covenants present considerable hurdles. The proposed reappointment of Mr. Garyali offers a degree of leadership stability.

Background

Fusion Finance, an NBFC specializing in retail and SME lending, experienced a sharp financial downturn in FY25 primarily due to substantial provisioning, which resulted in a large net loss. To strengthen its financial position, the company had previously authorized a rights issue totaling ₹799.86 crore.

Key Actions & Status

Shareholder approval will be sought at the upcoming Annual General Meeting (AGM) for the re-appointment of Mr. Sanjay Garyali as MD & CEO. The company is currently in discussions with lenders concerning the breach of financial covenants on ₹101.64 crore in borrowings. Additionally, 10,00,000 equity shares are slated for issuance to the Fusion Employees Benefit Trust under the ESOP 2023. As of March 31, 2026, ₹403.44 crore of the rights issue funds remained unutilized.

Financial Risks

A primary concern is the breach of financial covenants tied to ₹101.64 crore in borrowings. This could trigger demands for immediate repayment, potentially impacting liquidity. The outcome of ongoing negotiations with lenders will be crucial in averting significant financial restructuring.

Peer Performance

For comparison, in FY25, MAS Financial Services Ltd reported a PAT of ₹546.07 crore on revenues of ₹2,541.58 crore, while Aavas Financiers Ltd posted FY25 PAT of ₹487.40 crore with revenues of ₹2,268.97 crore. Fusion Finance's FY26 performance of ₹13.85 crore PAT on ₹1,698.53 crore revenue shows its smaller scale and the significant recovery effort required to align with industry peers.

Key Figures

Here are key financial figures from the report:

• Total Revenue: ₹1,698.53 crore (FY26)
• Profit After Tax: ₹13.85 crore (FY26)
• Loss After Tax: ₹1,224.54 crore (FY25)
• Unutilized Rights Issue Funds: ₹403.44 crore (as of March 31, 2026)
• Borrowings with Breached Covenants: ₹101.64 crore (as of March 31, 2026)

Looking Ahead

Investors will be watching for:

• The outcome of shareholder votes on Mr. Sanjay Garyali's reappointment.
• How the company resolves its ongoing discussions with lenders over the covenant breach.
• Any further developments regarding asset quality and provisioning in the coming quarters.
• The company's strategy to stimulate revenue growth.
• Potential impacts of the covenant breach on future borrowing costs and capital access.