Fusion Micro Finance shares bleed 30% in 5 days! Here are target prices

Taking its losing run to the fifth straight session, Fusion Micro Finance Ltd (Fusion Finance) tumbled 12 per cent in Thursday's trade as investors react to a surprise worsening of asset quality. Analysts have slashed their earnings estimates for Fusion Finance by up to 70 per cent since June quarterly results, accelerating the fall on the counter that is now down 30 per cent in five sessions.

The emergence of asset quality troubles in Punjab and now in multiple states have led to Fusion Micro Finance missing its credit cost guidance by a wide margin, driving down profitability expectations. While credit costs have increased for all MFI players, the quantum of stress flow for Fusion Finance has negatively surprised, said JM Financial as it downgraded the stock to 'Sell'. 

Fusion Micro Finance shares fell 11.67 per cent to hit a low of Rs 306.30 on BSE. With this, the stock has fallen 30.09 per cent in five sessions. MOFSL sees no upside catalysts and, hence, downgraded the stock to 'Neutral' with a revised price target of Rs 440.

Factoring in significantly higher-than-expected credit cost in Q1FY25 and likely elevated credit cost in near term, ICICI Securities has slashed its earnings projections for Fusion Micro Finance by 46 per cent for FY25 and 11 per cent for FY26, as chopping its target to Rs 385 from Rs 500 earlier.

"The fall in collection efficiency to 96.3 per cent for the quarter from 98.3 per cent in the last quarter (ex-Punjab) indicates unfavourable ground reality for lending. The company has always been facing concentration risk, which continues to remain intact with the share of the top five states staying elevated at 70.4 per cent," InCred Equities said.