Fusion Micro Finance AUM Surpasses 10,000 Cr in Q2FY24
Fusion Micro Finance, India’s leading NBFC-MFI, boasts a robust presence with 1,164 branches spanning 22 states and 3 union territories as of September 30, 2023. The company’s primary mission is to empower underserved and unserved women entrepreneurs in rural areas through microfinance, offering small-value collateral-free loans and MSME loans. Notably, the company expanded its reach by adding 61 new branches, reaching a total of 1,164 branches, and welcoming 2.4 lakh new clients in Q2FY24.
Consistent AUM & Disbursement growth – 24.6% YoY/ 14.2% YoY
In Q2FY24, Fusion Micro Finance achieved remarkable milestones, with its Assets Under Management (AUM) surpassing 10,000 Crores to reach 10,026 Crores, reflecting a YoY growth of 24.6% and a QoQ increase of 3.24%. Concurrently, disbursements amounted to 2,344 Crores, growing 14.2% YoY and 2.5% QoQ. The company also witnessed a 15.6% YoY growth in active borrowers, reaching 36.9 lakhs in Q2FY24, compared to 31.9 lakhs in Q2FY23.
NIMs expand 91 bps YoY (+23 bps QoQ) driven by stable CoB at 10.6% in Q2
Fusion Micro Finance displayed a remarkable financial performance, with Net Interest Income (NII) growing 26.1% YoY and 3.5% QoQ to reach 306 Crores. Notably, the Net Interest Margins (NIMs) expanded by 23 bps QoQ and an impressive 91 bps YoY to stand at 11.1%. This expansion was driven by a stable Cost of Borrowing at 10.6%. The Cost-to-Income ratio decreased by 11 bps YoY but increased by 15 bps QoQ to 36.41%. The company also recorded a growth of 140 bps in the Yield on Loans, reaching 21.7%.
Asset Quality Improved & Strong Capital Position (CCRA-28.78%)
In Q2FY24, Fusion Micro Finance showcased an improved asset quality, with a decline in Gross Non-Performing Assets (GNPA) and Net Non-Performing Assets (NNPA) by 52 bps and 13 bps QoQ, respectively, resulting in levels of 2.68% and 0.65%, as compared to 3.83% and 1.12% in Q2FY23. The provision coverage ratio reached 76.39%, and collection efficiency improved by 30 bps QoQ to 97.6% in Q2FY24. The company maintained a robust Capital Adequacy Ratio of 28.78% in Q2FY24, exceeding the RBI’s guidelines of 15%.
Valuation and Key Ratios:
Currently, Fusion Micro Finance’s stock is trading at 2.17 times its book value, which amounts to 256 Rupees per share, at a market price of 575 Rupees. The company’s Return on Equity (ROE) declined by 593 bps YoY and 19 bps QoQ to 20.02%. On the other hand, Return on Assets (ROA) increased to 4.94%, up by 16 bps YoY but down by 5 bps QoQ. The Interest Coverage Ratio stood at 1.85x, indicating the company’s solvency.
Q2FY24 Results Updates:
➡️ In Q2FY24, Fusion Micro Finance experienced notable growth in interest income, which increased by 24.3% YoY and 3.8% QoQ, reaching 497 Crores.
➡️ Interest expenses also saw a YoY growth of 21.4% and a QoQ increase of 4.1% to 191 Crores, resulting in a net interest income of 306 Crores, a growth of 26.14% YoY and 3.5% QoQ.
➡️ NIMs expanded by 91 bps YoY and 23 bps QoQ to 11.1%, primarily due to a stable Cost of Borrowing at 10.6%.
➡️ Pre-provision operating profit (PPOP) grew by 29.1% YoY and 2.7% QoQ, reaching 242 Crores. Total operating expenses increased by 28.5% YoY and 3.4% QoQ, while the cost-to-income ratio declined by 11 bps QoQ.
➡️ Net profit surged by 32.2% YoY and 4.3% QoQ to reach 126 Crores, driven by stable provisions on a QoQ basis at 76.2 Crores (PQ-75.9 Cr).
➡️ Earnings per share (EPS) for the quarter stood at 12.44 Rupees, a growth of 32.2% YoY and 4.3% QoQ.
Fusion Micro Finance, India’s leading NBFC-MFI, continues to demonstrate impressive growth and financial stability in Q2FY24. With a commitment to empowering underserved women entrepreneurs in rural areas, the company has expanded its branch network, increased its client base, and improved its asset quality. Notably, strong financial performance, expanding NIMs, and a robust capital position underscore Fusion Micro Finance’s resilience and potential for continued success in the microfinance sector.