The focus on strengthening portfolio quality and pursuing calibrated growth in a dynamic operating environment has helped micro-finance company Fusion Finance return to profitability.

The Warburg Pincus-backed company has also improved margins and collection efficiency in the December quarter.

The asset quality indicators strengthened during the quarter, with gross NPA easing to 4.38 per cent in the December quarter compared with 4.61 per cent in September.

Loan disbursement rose 23 per cent quarter-on-quarter to ₹1,594 crore, the highest in the past five quarters, reflecting a gradual pick-up in business momentum.

The NBFC reported a profit after tax of ₹14 crore in Q3 FY26, compared with a loss of ₹22 crore in the previous quarter. Barring the one-time impact of ₹7 crore for new labour codes, the profitability would have been higher at over ₹21 crore.

Assets under management declined marginally by 2.3 per cent to ₹6,876 crore, highlighting the company’s focus on tighter underwriting.

Sanjay Garyali, MD & CEO, Fusion Finance, said the company remained focused on strengthening core fundamentals, maintaining portfolio quality and pursuing calibrated growth.

The improvement in collections across both the overall portfolio and the new book reinforced the resilience of the company’s business model, he added.

Margin performance improved with net interest margin expanding to 11.32 per cent in the December quarter from 10.85 per cent in the previous quarter, aided by a lower cost of funds and improving portfolio quality.

The credit costs declined sharply to ₹79 crore from ₹111 crore sequentially and supported earnings growth.

The company’s balance sheet remained well-capitalised, with a capital adequacy ratio of 39 per cent, supported by the recently completed rights issue. Liquidity stood at ₹1,783 crore, comprising cash, cash equivalents, and liquid assets, amounting to 23 per cent of total assets.