Brokerages see over 30% upside in Fusion MicroFinance; stock jumps over 3.5%

Brokerage firm ICICI Securities and Investec are bullish on Fusion Micro Finance's stock and see an upside of over 30 per cent. According to reports, the company's prudent expansion strategy, growth potential, and commitment to becoming a trusted financial service provider in rural India are some key positives.

Apart from this, Investec believes that the finance industry is resilient, and its structural developments are creating a strong outlook for Fusion MicroFinance. The brokerage estimates the company's assets under management (AUM) to grow by 25 per cent at a compound annual growth rate (CAGR) and its profit to rise by 20 per cent over the next three years. 

Investec has initiated a 'buy' on the stock and has given a target price of Rs 780. 

Meanwhile, ICICI Securities said in a report that quality underwriting, stable management, and a strong rural presence have helped Fusion manage stress asset formation.

The report highlighted the company's commitment to becoming a trusted financial service provider in rural India and sustaining industry-leading profitability going forward.

ICICI Securities has maintained a 'buy' call on Fusion Micro Finance shares and has given a target price of Rs 800 apiece. 

At around 13:26 p.m., Fusion Micro Finance shares traded over 3.64 per cent higher at Rs 617.95 apiece. The stock climbed over 4 per cent in early trade but pared gains later. The market capitalisation of the company stood at Rs 6,198.85 crore.

Fusion Micro Finance Q1 performance 

The company posted a 60 per cent jump in net profit at Rs 121 crore for the June quarter against Rs 75.10 crore year-on-year (YoY) on the back of improving asset quality.

The Net interest income (NII) increased by 59.24 per cent YoY to Rs 294.07 crore against Rs 184.67 crore a year ago. The AUM grew 31.43 per cent YoY to Rs 9,711.75 crore against Rs 7,389.02 crore, according to the regulatory filing. 

Fusion Micro Finance: Past performance

The shares of the company have gained over 66.34 per cent year-to-date compared to the Nifty's rise of over 10 per cent in the same duration.

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