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News Topical, Digital Desk : According to brokerage firm Motilal Oswal, the microfinance sector is showing signs of gradual improvement, although the pace of recovery in the first quarter of FY26 was slower than previously anticipated. According to the report, the sector has been under increasing pressure over the past year due to the sector's high debt position, while the sector also faced various challenges in several states. These factors have delayed the sector's recovery.
What the report said:
According to the report, weather disruptions like floods have affected states like Punjab and Jharkhand. However, analysts believe this situation is temporary and will return to normal within two to three weeks. Concerns remain about some high-ticket loans in Assam as some customers are facing difficulty in repaying their installments. Despite these challenges, the brokerage expects the MFI industry to see growth in the second half of FY26. Currently, the sector has contracted by approximately 19% compared to March 2024, with total loans falling to approximately ₹3.5 lakh crore. Analysts believe the worst of the MFI cycle is over and a gradual recovery is now likely. Motilal Oswal has given Fusion Finance a Buy rating, citing attractive valuations. It has a target price of ₹240. The stock is currently trading at ₹190. A Buy rating has been maintained on Creditaccess Grameen, as its recovery is expected to be faster than the industry. The stock has a target of 1660. The stock is currently trading at 1381. Spandana Sphoorthy has been downgraded to Neutral as the recovery is slow and no major triggers are visible in the near future.
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