FUSION MICRO FINANCE 2023-24 Annual Report Analysis

Mon, 9 Sep

FUSION MICRO FINANCE has announced its results for the year ended March 2024. Let us have a look at the detailed performance review of the company during the year 2023-24.

FUSION MICRO FINANCE Income Statement Analysis

• Interest income during the year rose 33.0% on a year-on-year (YoY) basis.
• Interest expenses were up by 21.5% YoY during the same period.
• Operating expenses increased by 48.8% YoY during the year.
• The company's net interest income (NII) increased by 39.8% YoY during the fiscal. Consequently, net interest margins (NIM) witnessed a growth and stood at 15.3% in FY24 as against 13.5% in FY23.
• Other income increased by 45.2% YoY during the year.
• Net profit for the year increased by 30.5% YoY.
• Net profit margins during the year declined to 21.8% in FY24 from 22.2% in FY23.

FUSION MICRO FINANCE Income Statement – 2023-24

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*	% Change
Interest Income	Rs m	17,419	23,167	33.0%
Other Income	Rs m	659	957	45.2%
Interest Expense	Rs m	6,506	7,908	21.5%
Net Interest Income	Rs m	10,913	15,259	39.8%
Operating Expense	Rs m	6,378	9,493	48.8%
Pre-provision Operating Profit	Rs m	5,194	6,723	29.4%
Provisions & Contingencies	Rs m	12	11	-9.2%
Profit before tax	Rs m	5,120	6,633	29.5%
Tax	Rs m	1,248	1,580	26.5%
Profit after tax	Rs m	3,872	5,053	30.5%
Minority Interest	Rs m	0	0	0.0%
Net Interest Margin	%	13.5	15.3
Net profit margin	%	22.2	21.8

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FUSION MICRO FINANCE Balance Sheet Analysis

• The company's deposits during FY24 stood at Rs 0 m as compared to Rs 0 m in FY23, thereby witnessing an increase of 0.0%.
• Advances for the year stood at Rs 99.5 bn as compared to Rs 80.4 bn during FY23, a rise of 23.7%.
• Cost of deposits for FUSION MICRO FINANCE rose 0.0% and stood at 0.0%, while yield on advances rose to 0.0%.
• The lender's investments fell to Rs 123 m during the year from Rs 444 m in FY23.
• Borrowing stood at Rs 0 m, a growth of 0.0% as compared to previous year.
• Overall, the total assets and liabilities for FY24 stood at Rs 116.8 bn as against Rs 92.9 bn during FY23, thereby witnessing a rise of 25.8%.

FUSION MICRO FINANCE Balance Sheet – as on March 2024

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*	% Change
Networth	Rs m	23,140	28,296	22.3%
Advances	Rs m	80,416	99,479	23.7%
Deposits	Rs m	0	0	0.0%
Yield on advances	%	0.0	0.0
Cost of Deposits	%	0.0	0.0
Investments	Rs m	444	123	-72.3%
Borrowings	Rs m	0	0	0.0%
Total Assets	Rs m	92,858	116,827	25.8%

Current Valuations for FUSION MICRO FINANCE

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 50.0, an improvement from the EPS of Rs 38.5 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 310.0, stands at 10.8 times its trailing twelve months earnings.
• The price to adjusted book value (P/ABV) ratio at current price levels stands at 1.1 times, while the price to income ratio stands at 2.4 times.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*
Income per share (Unadj.)	Rs	173.1	229.3
Earnings per share (Unadj.)	Rs	38.5	50.0
Diluted earnings per share	Rs	38.3	50.0
Avg P/E ratio	Rs	10.0	10.8
Avg P/ABV ratio	Rs	2.7	1.1
Avg Market Cap	Rs	38,531	54,813
Dividends per share (Unadj.)	Rs	0.00	0.00

Ratio Analysis for FUSION MICRO FINANCE

• Efficiency Ratios

  Credit/Deposit Ratio: The company's credit/deposit ratio improved and stood at 9,947,870.0x during FY24, from 8,041,560.0x during FY23. The credit/deposit ratio tells us how much money a company has raised in the form of deposits and has deployed as loans.

  Debt to Equity Ratio: The company's debt to equity ratio increased and stood at 0.00x during FY24, from 0.00x during FY23. The debt to equity ratio of a company tells us how much debt a company uses relative to its equity.

• Liquidity Ratios

  Capital Adequacy Ratio (CAR): FUSION MICRO FINANCE's capital adequacy ratio (CAR) was at 27.5% as on 31 March 2024 as compared to 27.9% a year ago. This ratio helps measure the financial strength of the company or any finance company to meet their obligations using their assets and capital.

  A company that has a good CAR has enough capital to absorb potential losses. Thus, it has less risk of becoming insolvent and losing depositor's money.

  Provision Coverage Ratio (PCR): Apart from CAR, you also need to take a look at the company's PCR and LCR ratios. Provisioning coverage ratio (PCR) is the percentage of funds that a company sets aside for covering losses due to bad debts.

  So a high PCR ratio means asset quality issues are under control and the company is not vulnerable.

  Liquidity Coverage Ratio (LCR): The LCR is designed to ensure that companies hold a sufficient reserve of high-quality liquid assets to allow them to survive a period of significant liquidity stress lasting 30 calendar days.

• Profitability Ratios

  Return on Equity (ROE): The return on equity (ROE) ratio for the company improved and stood at 17.9% during FY24, from 16.7% during FY23. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

  Return on Assets (ROA): The return on asset (ROA) ratio of the company improved and stood at 4.33% during FY24, from 4.17% during FY23. The ROA measures how efficiently the company uses its assets to generate earnings.

  Return on Capital Employed (ROCE): The ROCE for the company deteriorated and stood at 14.14% during FY24, from 14.34% during FY23. The ROCE measures the ability of a company to generate profits from its total capital (shareholder capital plus debt capital) employed in the company.

• NPA Ratios

  Gross NPA Ratio: The gross NPA ratio is the ratio of a company's gross NPAs to gross advances. FUSION MICRO FINANCE's gross NPA ratio stood at 0.0% as of 31 March 2024 compared to 0.0% in the same period a year ago.

  A high gross NPA ratio is a bad thing as it indicates how much of a company's loans are in danger of not being repaid.

  Net NPA Ratio: In simple language, net NPAs are simply the total non-performing assets minus the provision left aside. It gives you the exact value of NPAs after the company has made provisions.

  The net NPA ratio of FUSION MICRO FINANCE was 0.6% in financial year 2024. This compared with 0.9% a year ago.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*
Credit/Deposit Ratio	x	8,041,560.0	9,947,870.0
Debt to Equity Ratio	x	0.0	0.0
Loans / Deposits	x	0.0	0.0
Capital Adequacy Ratio	%	27.9	27.5
Return on Equity	%	16.7	17.9
Return on Assets	%	4.2	4.3
Return on Capital Employed	%	14.3	14.1
% of Gross NPAs	%	0.0	0.0
% of Net NPAs	%	0.9	0.6
Yield on Advances	x	0.0	0.0
Yield on Investments	x	0.0	0.0

To see how FUSION MICRO FINANCE has performed over the last 5 years, please visit here.

FUSION MICRO FINANCE Share Price Performance

Over the last one year, FUSION MICRO FINANCE share price has moved down from Rs 618.4 to Rs 310.0, registering a loss of Rs 308.4 or around 49.9%.

Overall, the S&P BSE SENSEX is up 24.0% over the year.

(To know more, you can check out historical annual results for FUSION MICRO FINANCE here and quarterly results for FUSION MICRO FINANCE here)