Fusion Micro Finance Well-Capitalised For Medium-Term Growth Ambitions Says Clsa

CLSA gave a target price of Rs 550 on the Fusion Micro Finance stock, indicating an upside potential of over 46 percent from Monday’s closing level of Rs 376.10.

Reacting to the development, shares of Fusion Micro Finance hit an intra-day high of Rs 405 apiece on Tuesday.

CLSA said that Fusion Micro Finance was among the youngest large microfinance institutions in India with a balance sheet of $1 billion and is well-capitalised for its medium-term growth ambitions.

The brokerage firm believes that over the next two years Fusion Micro Finance is poised to benefit not only from the microfinance recovery cycle in India but also from the (interest rate) spread deregulation that came about in 2022.

It expects Fusion Micro Finance’s assets under management (AUM) to record a 25 percent compounded annual growth rate (CAGR) over the fiscal years 2022-2025 with an average RoA (return on assets)/RoE (return on equity) of 4.7 percent/20 percent over the next two years.

Earlier this month, ICICI Securities also initiated coverage on the Fusion Micro Finance stock with a ‘buy’ rating and a price target of Rs 600.

In a research report dated January 23, ICICI Securities…