Fusion Finance Q2 PAT rises 39% sequentially to Rs 86 crore

Fusion Finance Limited reported Q2 FY27 profit after tax of Rs 86 crore, up 39% quarter on quarter for the quarter ended September 30, 2026, as credit cost fell about 65% year on year to Rs 39 crore, net interest margin reached 12.5%, and gross non-performing assets declined to 1.6%.

How did Fusion Finance's Q2 FY27 profit change?

Fusion Finance's profit after tax rose 39% quarter on quarter to Rs 86 crore in Q2 FY27. The company announced the result on November 2, 2026, for the quarter and half year ended September 30, 2026, and said the period reflected progress in operating fundamentals and profitability.

Pre-provision operating profit, or PPOP, increased about 40% year on year to Rs 125 crore, exceeding the reported growth rates for both total income and net interest income. Total income rose about 12% year on year to Rs 486 crore, while net interest income, or NII, increased about 7% to Rs 265 crore.

The reported figures show a difference between revenue growth and operating-profit growth in Q2 FY27. PPOP increased by about 40%, compared with 12% growth in total income and 7% growth in NII, while the cost-to-income ratio improved by about 746 basis points, or bps, year on year to 62.7%.

Annualised return on assets, or ROA, was about 4.0% and annualised return on equity, or ROE, was about 13.5% in Q2 FY27. Fusion Finance described both measures as improved, while its capital to risk-weighted assets ratio, or CRAR, stood at 36.75%; the announcement did not provide comparable prior-period figures for these three ratios.

What reduced Fusion Finance's credit and borrowing costs?

Fusion Finance reported credit cost of Rs 39 crore in Q2 FY27, about 65% lower year on year. The decline came alongside a gross non-performing asset, or GNPA, ratio of 1.6%, which improved by about 301 bps year on year according to the company.

The marginal cost of borrowing declined about 281 bps year on year to 9.4%. Fusion Finance said this lower borrowing cost, together with yield expansion, drove a 167 bps year-on-year increase in net interest margin, or NIM, to 12.5%.

The improvement in NIM was larger than the reported 7% year-on-year increase in NII, although the announcement does not provide the prior-year NII amount or yield level. The disclosed 12.5% NIM, 9.4% marginal borrowing cost and Rs 39 crore credit cost are the specific funding and credit indicators reported for Q2 FY27.

Collection metrics also improved from the prior-year comparison. Average net collection efficiency was 99.84%, up about 52 bps year on year, while gross average collection efficiency was 99.7%; Fusion Finance cited the gross measure and the 1.6% GNPA ratio when discussing its operating performance.

How fast did Fusion Finance's loan book and disbursements grow?

Fusion Finance's assets under management, or AUM, grew about 14% year on year to Rs 8,007 crore in Q2 FY27. Disbursements rose about 33% year on year to Rs 1,726 crore, a faster reported growth rate than the AUM base over the same comparison.

The difference in the two reported growth rates was about 19 percentage points, with disbursements expanding 33% and AUM rising 14%. The announcement does not disclose sequential AUM growth, product-level disbursement volumes or the share of new lending in the Rs 8,007 crore AUM portfolio.

Branch productivity rose about 19% year on year, taking AUM per branch to Rs 5.4 crore. As of September 30, 2026, Fusion Finance had 1,475 branches across 22 states and Union Territories, including three Union Territories, and reported serving about 19.3 lakh clients.

Fusion Finance increased its micro, small and medium enterprise, or MSME, loan ticket size from Rs 25 lakh to up to Rs 50 lakh. The company said the change would enable it to serve more established small businesses and forms part of management's stated plan for a more diversified and productive franchise.

What is Fusion Finance planning after Q2 FY27?

Fusion Finance expects growth momentum to improve in Q3 and has retained a medium-term AUM growth ambition of 20% to 25%. Managing Director and Chief Executive Officer Sanjay Garyali said this expectation followed Q2 FY27 AUM of Rs 8,007 crore and disbursements of Rs 1,726 crore.

Management said its next phase of growth would be supported by disciplined underwriting, technology investments and an emphasis on profitable growth. That plan follows a quarter in which NIM was 12.5%, the cost-to-income ratio was 62.7%, and gross average collection efficiency was 99.7%.

Garyali said Fusion Finance remained mindful of the evolving operating environment while seeking to accelerate growth responsibly and preserve portfolio quality. The announcement provides the 20% to 25% AUM ambition but does not give a date by which that medium-term range is expected to be achieved.

The planned growth will therefore be assessed against disclosed operating measures as later results are released. The relevant starting points from Q2 FY27 are AUM of Rs 8,007 crore, GNPA of 1.6%, CRAR of 36.75%, and a marginal borrowing cost of 9.4%.

Conclusion

Fusion Finance's Q2 FY27 release indicates that the reported earnings improvement was accompanied by wider NIM, lower marginal borrowing cost, reduced credit cost and a lower GNPA ratio. Operating profit grew about 40% year on year to Rs 125 crore, compared with 12% total-income growth, while disbursements grew about 33% and AUM increased about 14%.

The next disclosed checkpoint is Q3, when management expects growth momentum to improve. Investors can watch whether the company advances toward its medium-term 20% to 25% AUM growth ambition while maintaining the Q2 FY27 collection, asset-quality, funding-cost and capital measures it reported.