Q1 2027 Fusion Finance Ltd Earnings Call Transcript
Key Points
- Disbursements grew 88% year-on-year to INR1,783 crore, with AUM up ~4% sequentially to INR7,702 crore.
- Asset quality improved significantly: GNPA fell from 3.21% to 2.51%, and net NPA stood at 0.47%.
- Credit costs declined for the seventh consecutive quarter to INR40 crore, aligning with the 2% annualized guidance.
- Marginal cost of borrowing reduced by ~250 bps year-on-year to 10.1%, with a strong liquidity buffer of INR1,880 crore and undrawn facilities of INR2,300 crore.
- Collection efficiency remained robust at above 99.75%, with hard-bucket recoveries of over INR35 crore quarterly, including INR21 crore from written-off portfolio.
- Strategic initiatives like in-house AI-driven collections, branch rationalization, and MSME expansion are expected to drive operating leverage and profitability.
- AUM growth target of INR10,000 crore for FY27 may be challenging given the current approval rates and seasonal softness in disbursements.
- Excess liquidity of INR1,880 crore is a drag on returns, though management plans to reduce it to ~INR1,400 crore by Q2.
- The company is rationalizing about 100 branches while opening only 50-60, leading to a net reduction in branch count, which could limit near-term growth.
- The individual loan product is still in early stages and is not expected to contribute meaningfully until Q3, adding uncertainty to growth projections.
- Management overlay of INR19.5 crore remains, and no release was made this quarter, indicating continued caution on credit risk.
- The external environment, including geopolitical tensions and monsoon variability, poses potential risks to portfolio quality and growth.
Ladies and gentlemen, good day, and welcome to Fusion Finance Limited Q1 FY27 earnings conference call. (Operator Instructions) Please note that this conference is being recorded.
I now hand the conference over to Ms. Hanishi Shah from Adfactors PR Investor Relations.
Good evening, everyone, and thank you for joining us on the Q1 FY27 earnings conference call of Fusion Finance Limited. We have the company's senior management team with us on this call.
Before we begin, I would like to remind you that certain statements made in today's discussion may be forward-looking in nature and may involve certain risks and uncertainties. A detailed statement in this regard is available in the Q1 FY27 investor presentation, which has been uploaded on the stock exchange and the company website.
I now hand over the call to Mr. Sanjay Garyali, MD and CEO of Fusion Finance Limited. We'll begin with the proceedings. Thank you, and over to you, sir.
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