Fusion Finance Shares Jump Nearly 16% on Q2 Turnaround

Fusion Finance’s Profit Rebound Puts Credit Quality Back in Focus

A return to quarterly profit and lower credit costs lifted sentiment, but investors will look for the improvement to hold as lending growth picks up.

Profitability improves as credit costs retreat

Fusion Finance’s return to profit marks a sharp change from the net loss of ₹22.14 crore recorded in the September 2025 quarter. Net profit was also up 39% sequentially, pointing to an improvement from the preceding quarter. Total income rose 12.2% year on year to ₹485.67 crore from ₹432.69 crore.

A key contributor was the reduction in credit costs, which fell 65% year on year to ₹39 crore. Lower credit costs can support earnings by reducing the burden of losses associated with lending, although the durability of that benefit depends on portfolio performance as the business grows. The company also reported a 7% year-on-year increase to ₹265 crore and said net interest margin expanded 167 basis points to 12.5%.

Asset quality and borrowing costs strengthen the turnaround

Gross non-performing assets declined to 1.6%, an improvement of about 301 basis points year on year. Managing director and chief executive Sanjay Garyali also cited collection efficiency of 99.7%. Together, these indicators suggest that improved collections and tighter portfolio discipline helped reduce pressure on earnings during the quarter.

The marginal cost of borrowing fell by 281 basis points to 9.4%. A lower borrowing cost can provide support to a lender’s margins, particularly when funding costs are an important part of its economics. For investors, the relevant test is whether this improvement can be sustained alongside expansion, rather than treating one quarter’s profitability as a settled trend.

Lending activity accelerates, raising the execution test

Assets under management grew 14% year on year to ₹8,007 crore, while disbursements increased 33% to ₹1,726 crore. Fusion Finance also raised the maximum MSME loan ticket size from ₹25 lakh to up to ₹50 lakh. These figures point to active lending and a broader ticket-size range, but faster disbursements also make it important to preserve repayment discipline and asset quality.

The company expects growth momentum to improve in the December quarter and continues to target AUM growth of 20–25% over the medium term. That ambition sets a clear benchmark for coming quarters. Investors will want to see whether growth translates into stronger income without reversing the progress in gross NPAs and credit costs.

The share rally reflects optimism, not certainty

Fusion Finance shares climbed as much as 15.6% to ₹153.50 intraday after the results, before giving back part of the gain and trading 7.5% higher at ₹142.72 at 2:40 p.m. Around 14 million shares changed hands on the BSE and NSE. The Sensex and Nifty were also up more than 1%, so the broader market provided a positive backdrop, even as the company’s earnings were the specific catalyst highlighted by the news.

The stock had recently touched a 52-week low of ₹126.81 on October 30, 2026, compared with a 52-week high of ₹243 on July 13, 2026. The wide gap underscores why a sharp post-results move alone does not establish a lasting recovery. Sustained profitability, asset quality and delivery against the growth target will matter more than a single session’s price action.

Key Highlights

• Net profit was ₹86.48 crore, against a loss of ₹22.14 crore a year earlier.
• Credit costs fell 65% year on year to ₹39 crore.
• Gross NPA improved to 1.6%, while collection efficiency was 99.7%.
• AUM rose 14% to ₹8,007 crore and disbursements increased 33% to ₹1,726 crore.
• Fusion Finance retained its medium-term AUM growth ambition of 20–25%.

Investor Note: The quarter shows a meaningful earnings and asset-quality improvement, but investors should assess whether lower credit costs and better collections persist as lending expands. Progress on the company’s growth target will be more informative than the immediate share-price reaction.