Shares of recently listed Fusion Micro Finance Ltd. ended below its IPO price of Rs 368 on Tuesday after its September quarter asset quality deteriorated and expected credit losses also increased.
The company's Gross NPA during the quarter stood at 3.83 percent compared to 3.67 percent during the June quarter, while Expected Credit Loss (ECL) increased 17 percent to Rs 285 crore from Rs 244 crore in the previous quarter.
Fusion Micro Finance, the second largest microfinance institution (MFI) in India, reported a 27 percent jump in its Net profit for the September quarter on a sequential basis. The company's Net Interest Margin also expanded 80 basis points quarter-on-quarter.
In an interaction with CNBC-TV18, Fusion's MD & CEO Devesh Sachdev said that the complete reflection of NIMs will start from the June quarter of the next financial year and that they plan on maintaining NIMs in the range of 11.2-11.5 percent.
The company's board also approved raising Rs 145 crore through the private placement of non-convertible debentures. The fund raising was approved despite the company still not fully utilising proceeds from its recently concluded IPO. Sachdev clarified that the fund raising discussion was done well before the company went for its IPO.
The management also said during its earnings call that they are slowly moving towards secured loans and that they will not be aggressive in trying to gain market share from peers.
Ratings agency CRISIL has upgraded Fusion's rating to CRISIL A / Stable from CRISIL A- / Stable due to the increase in capital post the IPO. The rating was also revised higher due to the expected improvement in profitability.
Shares of Fusion Microfinance ended 3 percent lower at Rs 364.
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