Fusion Finance posted a Q2 FY27 profit of Rs 86.48 crore, marking a turnaround from a loss in the previous year. ICICI Securities maintained a 'Buy' rating on the stock with a target of Rs 240, citing improved asset quality and operational efficiency.
Fusion Finance has reported a strong performance in the second quarter of fiscal year 2027, turning profitable with a net profit of Rs 86.48 crore. This is a significant shift from the Rs 22.14 crore loss the company recorded in the same period last year. Following these results, ICICI Securities has reaffirmed its 'Buy' rating on the stock, setting a price target of Rs 240.
The improvement in financial performance is supported by a 14% year-on-year growth in Assets Under Management (AUM), which reached Rs 8,007 crore. A key factor driving this growth is the company's focus on operational efficiency and a successful pivot in its business model since the management transition led by Sanjay Garyali in March 2025. The company achieved a 4% return on assets (RoA) ahead of its own internal schedule, reflecting the success of these strategic changes.
Asset quality has also seen a marked improvement. The company’s Gross Non-Performing Assets (GNPA) ratio improved to 1.6% in the second quarter, down from 4.61% in the year-ago period. Additionally, Net Interest Margins (NIM) expanded by 167 basis points to 12.5%, indicating better pricing power and efficient capital management. Credit costs were notably lower, falling below 2% and outperforming management's earlier guidance of 2% to 2.5% for the fiscal year.
Despite these positive results, the company operates in a competitive microfinance segment that remains sensitive to external factors. While current risk management protocols have led to a high collection efficiency of 99.78% as of October 2026, the company faces potential risks from macroeconomic volatility. Investors may monitor how the company navigates the current interest rate cycle, which can influence borrowing costs and loan demand. Continued success will depend on maintaining this improved asset quality and managing risks associated with the broader microfinance sector.
The firm's ability to sustain this recovery will be a key focus area for analysts in the coming quarters. The management is expected to discuss these developments further during upcoming institutional investor meetings scheduled for November 4-5, 2026, which may provide more clarity on the future growth strategy and operational outlook.