Fusion Finance Limited has reaffirmed its strategic focus on Uttar Pradesh, identifying the state as one of India's most significant markets for advancing financial inclusion alongside sustainable microfinance and MSME lending growth. The company reported profitability in Q3 FY26 while highlighting the state's critical importance to its operating strategy.

Strong Uttar Pradesh Market Position

The company has established a commanding presence in Uttar Pradesh, with the state representing a substantial portion of its overall business operations:

Q3 FY26 Financial Performance and Strategic Outlook

Fusion Finance achieved profitability in Q3 FY26, marking a significant milestone in the company's financial performance. The company's total Asset Under Management (AUM) stood at Rs. 6,876 crore as of December 31, 2025, serving over 23.4 lakh customers across India.

Speaking about the company's commitment, Mr. Sanjay Gargyali, MD & CEO, stated: "Q3 FY26 was a quarter of steady and disciplined execution for Fusion Finance. We delivered profitability while continuing to deepen our operational reach and strengthen asset quality. Markets like Uttar Pradesh remain a prime focus for us because of the strong demand for responsible credit."

Market Dynamics and Growth Drivers

Uttar Pradesh's appeal stems from its large rural and semi-urban population, growing entrepreneurial activity, and sustained demand for credit among low-income households and micro-entrepreneurs. The state holds nearly 11% market share in the MFI space, positioning it as a high-growth region within India's broader microfinance landscape.

Increasing financial awareness, gradual formalization of rural credit channels, and wider digital adoption are steadily strengthening access to organized finance in the state. These trends, combined with a resilient repayment culture, make Uttar Pradesh a structurally strong and diversified credit market.

Operational Excellence and Digital Transformation

Over the past year, Fusion has reinforced its institutional framework by strengthening branch-level monitoring, expanding digital onboarding through eKYC and digital signing, and deploying analytics for credit decisioning. The company has also implemented AI for operational efficiency, accelerating disbursement processes and improving underwriting discipline.

With 1,537 branches spread across 22 states including 3 Union Territories, Fusion Finance continues to focus on creating opportunities for underserved women entrepreneurs in rural areas while maintaining robust business practices and transparent policies.

Fusion Finance Limited delivered a remarkable turnaround in Q3 FY26, posting a profit after tax of ₹14.05 crore compared to a loss of ₹22.14 crore in the previous quarter. The microfinance institution demonstrated strong operational momentum with disbursements growing 23% quarter-on-quarter to ₹1,594 crore, marking the highest level recorded in the last five quarters.

Financial Performance Overview

The company's financial metrics showed marked improvement across key parameters during Q3 FY26:

Net Interest Margin improved to 11.32% in Q3 FY26 from 10.85% in Q2 FY26, supported by improving portfolio trends and a reduction in the cost of funds to 10.28% from 10.35% in the previous quarter. The company reported earnings per share of ₹1.05 for the quarter.

Asset Quality Strengthening

Asset quality indicators continued to strengthen during the quarter, reflecting the company's focus on portfolio discipline:

Asset under management stood at ₹6,876 crore as of December 2025, while the active borrower base stood at approximately 23.4 lakh. The company operated through 1,537 branches across 22 states, including 3 Union Territories, with collection efficiency reaching its highest level in the last six quarters.

Balance Sheet Strength

The balance sheet remained robust with strong capital and liquidity positions:

The reported profitability includes a one-time impact of ₹6.91 crore arising from the implementation of the new labour code. The company's strong liquidity position and capital adequacy provide a solid foundation for future growth initiatives.

Leadership Developments

The Board of Directors appointed Mr. Brahmmanand Hegde as Additional Non-Executive Independent Director for a period of five consecutive years effective February 6, 2026, subject to shareholder approval. Mr. Hegde brings over 30 years of experience in microfinance, rural banking, and financial inclusion, having been a founder and key promoter of Vistaar Finance.

Earnings Conference Call Audio Available

The company has uploaded the audio recording of its Q3 FY25-26 earnings conference call on its website. The conference call, which discussed the unaudited financial results for the quarter and nine months ended December 31, 2025, was conducted from 9:30 AM to 10:35 AM IST. The audio recording is accessible on the company's website at fusionfin.com, with the transcript to be made available in due course.

Management Commentary

Mr. Sanjay Gargali, MD & CEO, commented that Q3 FY26 was a quarter of steady and disciplined execution for Fusion Finance. He emphasized the company's focus on strengthening core fundamentals, maintaining portfolio quality, and pursuing calibrated growth. The quarter saw continued improvement in collections across both the overall portfolio and the new book, reinforcing the resilience of the business model.

Overall, Q3 FY26 performance reflects continued balance sheet strengthening, margin expansion, and a return to profitability, positioning the company for the next phase of growth.