Fusion Finance rebounds; broker targets imply 31% upside

Why Fusion Finance was in focus on Tuesday

Fusion Finance Ltd shares recovered on Tuesday after a steep 10% slide in the previous session. The rebound came as two brokerages, ICICI Securities and Motilal Oswal Financial Services (MOFSL), reiterated a positive stance on the stock. Both maintained ‘Buy’ recommendations and issued target prices that imply up to 31% potential upside from prevailing levels, as cited in the brokerage notes. The broker commentary centred on credit costs, asset quality, and the pace of recovery in the lender’s microfinance business.

Stock movement and trading snapshot

On Tuesday, Fusion Finance was trading 1.48% higher at ₹185.55 on the BSE. Separately, market data for 19 May 2026 (10:37) showed the stock at ₹182.17, down 0.64% at that time, highlighting intraday volatility across snapshots. The day’s range listed in the same data block was ₹177.80 to ₹183.45. The 52-week range was stated as ₹136.50 to ₹224.77. These moves come against a backdrop of heightened sensitivity in microfinance and consumer finance names to collection trends and credit costs.

ICICI Securities: ‘Peak pain is behind’ on asset quality

ICICI Securities said that normalising credit costs to sub-3% and improving overall asset quality are signals that “peak pain is behind.” Based on this view, the brokerage suggested a target price of ₹240 for Fusion Finance. The note linked its thesis to the trajectory of credit costs and the expectation that pressures seen earlier are easing. While the broader sector has been watching delinquency trends, ICICI’s comment specifically flagged improving asset quality and a reduction in credit costs as key indicators.

MOFSL: Buy call, AUM target unchanged

MOFSL also suggested a ‘Buy’ rating with a target price of ₹235. It said Fusion Finance’s FY27 assets under management (AUM) target of ₹10,000 crore remains intact. The brokerage note further stated that Fusion Finance trades at 1.1 times expected FY27 book value, positioning the stock as a valuation-led recovery idea in its framework. MOFSL’s argument leaned on improving recovery trends and a medium-term return profile.

MOFSL’s growth and profitability expectations through FY28E

With recovery “gaining traction,” MOFSL said it expects Fusion Finance to deliver an AUM CAGR of 25% over FY26E-28E. It also expects RoA and RoE of 3.8% and 13% respectively by FY28E. The brokerage reiterated its Buy rating with a revised target price of ₹235, noting this is based on 1.2x FY28E price-to-book value (P/BV). These figures outline MOFSL’s base case for scale-up and profitability improvement, as presented in the note.

Valuation markers investors are tracking

MOFSL’s note explicitly referenced valuation through price-to-book multiples, citing 1.1x expected FY27 book value and a 1.2x FY28E P/BV basis for its target price. In the market data block as of 19 May 2026, Fusion Finance’s P/E was listed at 214.97 and P/B at 1.81. Investors typically use P/B as a primary lens for lenders, while P/E can fluctuate sharply when earnings are volatile or depressed.

Key numbers at a glance

BSE market depth snapshot (19 May 2026)

The BSE market depth snapshot shared for 19 May 2026 showed a narrow spread and visible quantities near the top of the book. Total buy quantity was listed at 9,943, while total sell quantity was listed at 7,362. The bid and ask were shown at ₹178.75 and ₹179.10, respectively, at the time of that snapshot.

What this means for investors watching microfinance

The brokerage notes indicate that the near-term debate is shifting from stress recognition toward the pace of normalisation. ICICI’s framing around sub-3% credit costs and improving asset quality points to a focus on collections and delinquency improvements. MOFSL’s commentary keeps attention on the AUM runway and the ability to return to a steadier profitability profile by FY28E. For microfinance-focused NBFCs, the key monitoring variables generally remain collections, credit costs, and underwriting posture, and the broker commentary highlighted these levers directly.

What to watch next

The provided data set includes multiple valuation and trading snapshots across dates and platforms, underlining that the stock has seen large moves and changing sentiment. For Fusion Finance, the next set of verified signals investors will typically track are updates on credit costs, collection efficiency, and whether the stated AUM trajectory remains on track. Broker targets at ₹235-240 set an external reference point, but execution on asset quality and growth will remain the central operating variables highlighted in the notes.

Conclusion

Fusion Finance’s Tuesday rebound followed a sharp prior-session fall, with support from fresh ‘Buy’ reiterations by ICICI Securities and MOFSL. ICICI pointed to sub-3% credit costs and improving asset quality, while MOFSL kept its FY27 AUM target of ₹10,000 crore and projected 25% AUM CAGR over FY26E-28E. With targets of ₹235 and ₹240, broker commentary currently anchors the upside narrative in a recovery in collections and profitability, as reflected in their stated assumptions and valuation frameworks.