This Small Cap Stock Has Surged 60% This Year: Why Analyst Sees Further 30% Rally

Shares of Fusion Micro Finance have surged up over 60% this year, and analysts at ICICI Securities see the stock going up further as they remain impressed by the company’s quality underwriting, stable management team and strong rural presence.

The Fusion Analyst: The Renish Bhuva-led analyst team at ICICI Securities maintained the ‘buy’ rating on the stock with a target price of ₹800. The price indicates an around 35% upside from the stock’s last closing price of ₹596.25.

The Fusion Thesis: The brokerage in its latest note said that the company its annual report reiterated its commitment to becoming a trusted financial services provider in rural India. Additionally, the company aims to maintain industry-leading profitability in the future.

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The analyst further stated that although microfinance remains a central component of its operations, Fusion is experiencing significant growth in its micro, small and medium-sized enterprises (MSME) vertical. This growth is evident in the disbursement of ₹220 crore in FY23, resulting in an MSME assets under management of ₹300 crore as of March 2023

“Quality underwriting, stable management team and strong rural presence (less vulnerable than urban) have helped Fusion in managing stress asset formation in FY23,” the brokerage firm said in its note.

Price Action: Fusion’s share price was trading 3.76% higher at ₹618.65 in the early hours of trading on Thursday.

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