Fusion Finance Ltd · NSE:FUSION
Fusion Finance — Q1 FY25 Earnings Presentation
47 slides from Fusion Finance's earnings presentation, Aug 6, 2024
Slide 1: Exchange cover letter: submission of earnings presentation
Letter No. FFL/SEC/2024-25/SE-63 Date: 06.08.2024 The Manager The Manager Listing Department Listing Department National Stock Exchange of India Limited BSE Limited Exchange Plaza, Plot No. C/1, G Block Bandra Phiroze Jeejeebhoy Towers Kurla Complex, Bandra (E), Mumbai - 400 051 Dalal Street, Mumbai
Slide 2: Investor Presentation Q1 FY25
Creating Opportunities… Creating Investor Presentation Opportunities… Q1 FY25 Fusion Finance Limited
Slide 3: Disclaimer
Disclaimer Creating Opportunities… By attending the meeting where this Presentation is made, or by reading the Presentation materials, you agree to be bound by the limitations contained herein and to maintain absolute confidentiality regarding the information disclosed in this Presentation. Any fail
Slide 4: Presentation Path
Presentation Path Creating Opportunities… Executive Summary Vision, Mission & Values Key Strengths 1 3 5 Financial Overview Our Presence Performance 2 4 6 3 |August 6, 2024 | © Fusion Finance Limited | www.fusionfin.com
Slide 5: Executive Summary
Creating Opportunities… Executive Summary 1 4 |August 6, 2024 | © Fusion Finance Limited | www.fusionfin.com
Slide 6: Executive Summary Q1 FY25
Executive Summary Q1 FY25 Creating Opportunities… Consistent AUM & Disbursement growth Stable QoQ NIM PPOP stands at ₹297.75 Cr Overall profitability hit due to early risk recognition and conservative provisioning Reduction in Marginal Cost of Funds Network Expansion – 101 branches added Strong bala
Slide 7: Performance Highlights
Performance Highlights Creating Opportunities… Key Metrics Q1’25 Q1’24 YoY Q4’24 QoQ Total Income (₹ Cr) 706.68 552.78 27.84% 675.14 4.67% NII (₹ Cr) 396.55 294.07 34.85% 359.98 10.16% NIM 11.64% 10.89% 75 bps 11.59% 5 bps Cost to Income 38.39% 36.26% 213 bps 36.84% 155 bps PPOP (₹ Cr) 297.75 235.39
Slide 8: Current challenges
Current challenges Creating Opportunities… Customer Leverage JLG discipline & culture - Low center meeting attendance leading to door-step Collections Customer migrations Field Attrition Collection efficiency for Q1 at 96.3% including arrears 7 |August 6, 2024 | © Fusion Finance Limited | www.fusion
Slide 9: Fusion Customer Base Composition Mar'23 vs Mar'24
Fusion Customer Base Composition || Mar’23 Vs Mar’24 Creating Opportunities… Unique to Fusion Details Fusion+1 Fusion+2 Fusion+3 Fusion+4 Fusion+5 Fusion+>5 (Ever + Now) Mar'23 33.40% 30.10% 20.10% 10.00% 4.00% 1.40% 0.70% Mar'24 28.20% 18.00% 16.30% 13.30% 9.60% 6.20% 8.40% Fusion Customers Fusion
Slide 10: Credit Cost break-up for Q1
Credit Cost break-up for Q1 Creating Opportunities… (₹ Cr) 66.0 (0.62%) 207.5 141.5 (1.96%) (1.34%) 347.9 (3.24%) 140.4 (1.28%) Stage Movement EAD ₹ Cr Movement Basis 1. Payment behaviour and NIL payment in July (~55 k Stage I to Stage III 201.38 customers) 2. High leverage as per CB data 3. Center
Slide 11: Credit Cost
Credit Cost Creating Opportunities… (₹ Cr) Particulars Q1 FY 25 Q1 FY 24 Q4 FY 24 Opening ECL [A] 354.54 312.66 311.85 - Provisions as per ECL [B] 347.92 75.08 117.80 Reversals (on account of write-off) [C] 58.40 59.36 75.11 Closing ECL [D = A+B-C] 644.06 328.38 354.54 Impairment [F] 347.92 75.08 11
Slide 12: Actions taken: Expecting normalization from H2
Actions taken || Expecting normalization from H2 Creating Opportunities… Actions taken by FUSION Calibrated disbursement in Q2 inline with portfolio risk assessment Stopped disbursement in 104 branches New customer sourcing criteria tightened Rationalized customer handling at RO level from ~540 to ~
Slide 13: Overview
Creating Opportunities… Overview 2 12 |August 6, 2024 | © Fusion Finance Limited | www.fusionfin.com
Slide 14: 14+ years of proven track record
14+ years of proven track record Creating Opportunities… Diversified Client Growth AUM Growth Organically diversified ~20% over last 5 Years ~34% over last 5 years since inception Technology Robust Liability Marquee Investor On Cloud since 2013 Warburg Pincus - 2018 Management Ratings IPO New Produc
Slide 15: Vision, Mission & Values
Creating Opportunities… Vision, Mission & Values 3 14 |August 6, 2024 | © Fusion Finance Limited | www.fusionfin.com
Slide 16: Vision, Mission and Values
Vision, Mission and Values Creating Opportunities… Vision: “Fusion Finance with a social vision and business orientation aims to provide underprivileged women with economic opportunities to transform the quality of Mission: their lives.” “A self-sustainable financial institution which leverages the
Slide 17: Our Presence
Creating Opportunities… Our Presence 4 16 |August 6, 2024 | © Fusion Finance Limited | www.fusionfin.com
Slide 18: Our Presence
Our Presence Creating Opportunities… J & K (2) Punjab (55) Himachal Pradesh (9) Uttarakhand (21) Haryana (47) Rajasthan (110) Uttar Pradesh (256) Assam (28) Delhi (8) FY 10-15 FY 16 FY24 Q1 FY 25 States 5 9 22 22 Bihar(175) Madhya Pradesh (132) Districts 38 88 453 470 Jharkhand (61) Branches 75 173
Slide 19: Key Strengths
Creating Opportunities… Key Strengths 5 18 |August 6, 2024 | © Fusion Finance Limited | www.fusionfin.com
Slide 20: Key Strengths
Key Strengths Creating Opportunities… Diversification Liability Management Consistency Digital Orientation People Operational Prudence Strong Governance 19 |August 6, 2024 | © Fusion Finance Limited | www.fusionfin.com
Slide 21: Key Strengths: Diversification
Key Strengths : Diversification Creating Opportunities… QoQ Network Distribution Top 5 states concentration Rural vs Urban Presence 22 22 22 22 70.4% 70.4% 70.4% 94% 94% 93% 93% 94% 145 0 20 22 135 0 1242 1297 1398 20 125 0 1164 18 70.1% 115 0 1103 16 105 0 14 950 12 69.8% 850 10 750 8 6% 7% 7% 6% 6
Slide 22: Key Strengths: Consistency
Key Strengths : Consistency Creating Opportunities… (₹ Cr) QoQ AUM Disbursement Growth 25.54% Growth 30.73% 12,193 2,953 2,987 11,476 2,713 10,693 9,712 10,026 2344 2,285 Q1'24 Q2'24 Q3'24 Q4'24 Q1'25 Q1'24 Q2'24 Q3'24 Q4'24 Q1'25 AUM YoY Disbursement CAGR 33.56% CAGR 30.27% 10,294 11,476 8,596 9,29
Slide 23: Key Strengths: Consistency (Contd...)
Key Strengths : Consistency (Contd…) Creating Opportunities… For MFI Vertical QoQ AUM/ RO (₹ Cr) AUM/Branch (₹ Cr) Borrower/ Branch 1.4 9.1 9.1 3,513 3,381 1.4 1.3 8.8 8.9 8.9 1.3 3,260 3,204 1.2 3,017 Q1'24 Q2'24 Q3'24 Q4'24 Q1'25 Q1'24 Q2'24 Q3'24 Q4'24 Q1'25 Q1'24 Q2'24 Q3'24 Q4'24 Q1'25 YoY AUM/
Slide 24: Key Strengths: Operational Prudence
Key Strengths : Operational Prudence Creating Opportunities… For MFI Vertical QoQ Avg. Ticket Size (₹ K) Active Borrowers (Lakh) Avg. OS / Borrower (₹ K) Growth 8.43% 46.4 39.5 29.6 38.6 28.5 44.7 43.8 37.8 27.2 42.4 42.2 36.4 36.9 26.2 25.8 Q1'24 Q2'24 Q3'24 Q4'24 Q1'25 Q1'24 Q2'24 Q3'24 Q4'24 Q1'2
Slide 25: Branch Vintage
Branch Vintage Creating Opportunities… For MFI Vertical Mar’22 Mar’23 Mar’24 Jun’24 Branch Vintage (Years) POS POS POS Branches Branches POS Contribution Branches Branches Contribution Contribution Contribution <1 Yrs 190 7% 121 4% 181 4% 270 6% 1 - 2 Yrs 119 10% 190 14% 121 7% 106 6% 2 - 3 Yrs 87 9
Slide 26: Key Strengths: People
Key Strengths : People Creating Opportunities… Stable and experienced core management team with an average tenure of almost 8 years Strong second line with diverse experience with a healthy balance of home-grown and new talent Team Size Performance driven culture with differentiated rewards for high
Slide 27: Key Strengths: Liability Management
Key Strengths : Liability Management Creating Opportunities… Average Cost of Borrowing Marginal & Average Cost of Borrowing 10.7% 10.7% 10.6% 12.3% 10.6% 10.6% 11.2% 10.4% 10.3% 10.4% 10.1% 10.5% 10.4% 10.4% 10.2% 10.2% 10.1% YoY QoQ 10.1% '20 '21 '22 '23 '24 Q1'25 Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 Q1'2
Slide 28: Key Strengths: Liability Management (Contd...)
Key Strengths : Liability Management (Contd…) Creating Opportunities… Positive ALM (Months) Period Rating 23.7 24.2 23.1 24.0 23.0 17.5 18.8 20.4 22.2 17.6 17.5 17.6 Oct 2023 A+ Nov 2022 A FY 2019 A- FY 2017 BBB+ '20 '21 '22 '23 '24 Q1'25 Avg Maturity of Assets Avg Maturity of Liabilties Rating Rati
Slide 29: Key Strengths: Digital Orientation
Key Strengths : Digital Orientation Creating Opportunities… Technology – Infrastructure Customer Experience Early Cloud adoption Digital onboarding since 2019 Scalable Cashless disbursement at 99.32% in Open API Q1 FY25 Architecture Business Outcome Operational Efficiency “Touch & Tech” Loan Approva
Slide 30: Key Strengths: Digital Orientation (Building for future)
Key Strengths : Digital Orientation (Building for future) Creating Opportunities… Robotic Process Automation facilitating ▪ Automated credit decisioning Develop Technology Solutions Leverage Robotics ▪ Driving operational efficiency To proactively access opportunities To automate manual & repetitive
Slide 31: Key Strengths: Strong Governance
Key Strengths : Strong Governance Creating Opportunities… Independent Risk Independent Audit Function reporting Management Function to Board Audit Committee Extensive use of Au Strong reporting mechanism & Data Analytics nt d Comprehensive risk-based audits e it M nagem anage Automation driving opti
Slide 32: ESG - seeking to be a responsible Financial Institution
ESG - seeking to be a responsible Financial Institution Creating Opportunities… Responsible approach towards environment , community and employees as well as towards internal governance standards Continuous Engagement with Community and Employees Governance Standards Under 15 CSR programs, 196 activ
Slide 33: Corporate Social Responsibility
Corporate Social Responsibility Creating Opportunities… Creating a positive impact on the growth of disadvantaged communities through integrated and sustainable development initiatives 32 |August 6, 2024 | © Fusion Finance Limited | www.fusionfin.com
Slide 34: Glimpses of CSR Programs
Glimpses of CSR Programs Creating Opportunities… Project: FLP Project : Nanhi Pahel Project : Jivika Project : Urja Health Camp Project : Haryali (Plantation) (Financial Literacy) (Early Education & Childhood) Distribution of Project : Hariyali Project : Nanhi Pahel Project : Jal Road Safety Awarene
Slide 35: Financial Performance
Creating Opportunities… Financial Performance 6 34 |August 6, 2024 | © Fusion Finance Limited | www.fusionfin.com
Slide 36: Profit and Loss Statement
Profit and Loss Statement Creating Opportunities… Profit & Loss Statement (₹ Cr) Q1 FY 25 Q1 FY 24 YoY % Q4 FY 24 QoQ% Revenue from operations - Interest income 621.28 479.00 29.70% 576.06 7.85% - Other revenue from operations 67.04 52.07 28.75% 69.93 (4.13)% Total revenue from operations 688.32 531
Slide 37: Balance Sheet
Balance Sheet Creating Opportunities… Financial Position (₹ Cr) Q1 FY 25 Q1 FY 24 YoY % Q4 FY 24 QoQ% Financial and Non-financial assets - Cash & Other Bank Balances 1,590.00 1,177.08 35.08% 1,474.69 7.82% - Bank balances other than cash and cash equivalents 60.43 70.04 (13.72)% 78.50 (23.02)% - Loa
Slide 38: Key Ratios
Key Ratios Creating Opportunities… QoQ Margin Analysis Cost to Income Opex 21.5% 21.7% 21.9% 21.8% 21.7% 38.4% 6.3% 6.1% 36.3% 36.4% 36.8% 36.8% 5.9% 5.6% 5.6% 10.9% 11.1% 11.5% 11.6% 11.6% 10.6% 10.6% 10.4% 10.2% 10.1% Q1'24 Q2'24 Q3'24 Q4'24 Q1'25 Q1'24 Q2'24 Q3'24 Q4'24 Q1'25 Q1'24 Q2'24 Q3'24 Q4
Slide 39: Key Ratios
Key Ratios Creating Opportunities… ROA (On Avg. AUM) ROA (On Avg. Assets) ROE 5.07% 5.09% 4.88% 4.99% 4.94% 4.79% 4.71% 4.65% 20.21% 20.02% 19.14% 19.10% Q1’25 Q1’25 Q1’25 Q1’24 Q2’24 Q3’24 Q4’24 Q1’24 Q2’24 Q3’24 Q4’24 Q1’24 Q2’24 Q3’24 Q4’24 -1.20% -1.19% -5.03% GNPA NNPA 5.46% 1.25% 3.20% 0.78% 0
Slide 40: MSME
MSME Creating Opportunities… MSME vertical launched in Dec 2019 as a dedicated business unit to address the ‘missing middle’ Building credit assessment capability …nucleus of our MSME strategy Business Update Q1 FY 25 Clients 18,628 Clear focus on mapping adjacencies and potential thereof AUM (₹ Cr)
Slide 41: Highly Experienced Board with Strong Governance
Highly Experienced Board with Strong Governance Creating Opportunities… ◼ 26+ years of experience in Service/ Financial Services ◼ Served on the board of industry Over 34 years of experience Creditaccess Grameen and ◼ ◼ Holds a Post-Graduate Certificate Muthoot Microfinance, among working with compa
Slide 42: Stable & Experienced Management Team
Stable & Experienced Management Team Creating Opportunities… Tarun Mehndiratta Kamal Kumar Kaushik Sanjay Mahajan Gaurav Maheshwari Deepak Madaan COO – MFI COO- MSME CIO CFO CCO 2017 2019 2023 2016 2013 Ankush Ahluwalia Sanjay V Choudhary Satish Mani Pooja Mehta Vikas Jajoo CBO CRO CVO CHRO CAO 2015
Slide 43: Shareholder Profile
Shareholder Profile Creating Opportunities… Category Top Share Holders (As on date) Foreign Investment Co. LAZARD EMERGING MARKETS SMALL CAP EQUITY TRUST 57.71% 57.71% Foreign Investment Co. BOFA SECURITIES EUROPE SA Alternate Investment Fund NUVAMA PRIVATE INVESTMENTS TRUST Alternate Investment Fun
Slide 44: Recent Awards & Accolades
Recent Awards & Accolades Creating Opportunities… Fusion bags the “Best Education Support Initiative of the Year” award at Global CSR & ESG Awards 2024. Fusion’s Project “Shiksha” has been instrumental in changing lives of 500+ students across 15 states 43 |August 6, 2024 | © Fusion Finance Limited
Slide 45: Abbreviations
Abbreviations Creating Opportunities… AUM Asset Under Management H Half Yearly PAT Profit After Tax Q Quarter NIM Net Interest Margin ALM Asset Liability Management ROE Return on Equity TAT Turn Around Time ROA Return on Assets API Application Programming Interface ECL Expected Credit Loss UPI Unifi
Slide 46: Definitions
Definitions Creating Opportunities… • AUM represents the aggregate of principal outstanding for all loans including the assigned portfolio as of the last day of the relevant period/year • Net Interest Income represents interest income on loan portfolio for the relevant period/year reduced by finance
Slide 47: Thank You
Creating Opportunities… Creating Thank You Opportunities… For Investor queries contact: Mr. Deepak Madaan| Email: investor.relations@fusionfin.com | +91-9289224563 46 |August 6, 2024 | © Fusion Finance Limited | www.fusionfin.com