Fusion Finance Ltd shares recovered on Tuesday, following a 10 per cent slide in the previous session, as a couple of brokerages including ICICI Securities and MOFSL suggested 'Buy' on the stock with target prices suggesting up to 31 per cent potential upsides. From a net loss in FY25, the NBFC-MFI turned profitable in FY26, with a strong H2FY26 performance is seen setting the stage for a robust FY27.

After six consecutive quarters of sequential assets under management (AUM) decline on account of higher repayments against disbursements, Fusion Finance finally broke the trend, with disbursements reaching about Rs 2,140 crore against repayments of Rs 1,610 crore. 

The turnaround, analysts said, comes on the heels of a management transition in March 2025, with Sanjay Garyali taking the helm, and a subsequent business model reset.

Normalising credit costs to sub-3 per cent and improving overall asset quality signals peak pain is behind, ICICI Securities said as it suggested a target of Rs 240 on the stock. 

ICICI Securities said FY26 served as a foundational year for Fusion Finance, marked by a structural pivot toward higher-quality customers and a focus on building a sustainable, scalable business model. 

"While Q4FY26 profit benefited from a deferred tax benefit, core operating performance demonstrated a sharp improvement with PBT doubling sequentially in Q4FY26. Furthermore, the management is also focusing on diversifying the asset mix by scaling its MSME portfolio—which grew 15 per cent YoY to contribute 10 per cent of AUM, up from 7 per cent in FY25," it said. 

MOFSL suggested a 'Buy' on the stock with a target of Rs 235, noting that FY27 AUM target of Rs 10,000 crore by Fusion Finance is intact. Fusion Finance expects to reach its target by following a disciplined customer acquisition strategy and a continued focus on low-leveraged, stable borrower profile. 

"MSME is expected to be a key growth driver, led by deeper market penetration, increasing focus on the LAP segment, and expansion through new sourcing channels to strengthen origination and reach," MOFSL said.

MOFSL said Fusion Finance trades at 1.1 times expected FY27 book value. With recovery gaining traction, it expects Fusion Finance to deliver an AUM CAGR of 25 per cent over FY26E-28E with a RoA/RoE of 3.8 per cent/13 per cent by FY28E. 

"We reiterate our BUY rating with a revised TP of Rs 235 (based on 1.2x FY28E P/BV)," it said.

On Tuesday, the Fusion Finance scrip was trading 1.48 per cent higher at Rs 185.55 on BSE.