Fusion Micro Finance Shares Hit 20% Lower Circuit After Swinging To Loss In Q1

Shares of Fusion Micro Finance Ltd. hit 20% lower circuit on Wednesday after the company reported a loss in the quarter ended in June 30, 2024.

Fusion Micro Finance reported a Rs 35.6-crore loss, compared to a profit of Rs 120 crore in the corresponding period of the previous financial year, the company said in an exchange filing on Tuesday.

Early risk recognition and conservative provisioning affected the overall profitability of the microfinance company, it said in an exchange filing.

Fusion Micro Finance added 101 new branches during the April-June period, which pressured the bottom line of the company. Further, expansion in door-to-door collection, and higher cost of funds also impacted earning, according to Motilal Oswal Financial Services Ltd.

High customer leverage stressing the sector is more broad based across geographies. It will likely sustain longer than expectation, the brokerage said.

Motilal Oswal downgraded the stock to 'neutral', and cut the target price to Rs 440 per share from Rs 550 apiece.

Fusion Micro Finance's total income rose 27.8% year-on-year to Rs 707 crore from Rs 553 crore during the first quarter.

Shares of Fusion Micro Finance Ltd. hit a 20% lower circuit and fell to a low of Rs 346.40 per share, the lowest level since Nov. 24, 2022. They remained locked in 20% lower circuit, compared to 1.28% advance in the NSE Nifty 50.

The stock has declined 45.06% in 12 months, and 39.9% year-to-date. Total traded volume so far in the day stood at 1.44 times its 30-day average. The relative strength index was at 15.21, which implied the stock was oversold.

Out of 11 analysts tracking the company, four maintain a 'buy' rating, five recommend a 'hold' and two suggest 'sell', according to Bloomberg data. The average 12-month analysts' consensus price target implies an upside of 41.8%.