Northern Arc Capital shares list at 33.5% premium over IPO price

The shares of Northern Arc Capital listed on the exchanges on Tuesday with a premium of 33.5%. The stock debuted at Rs 351 on BSE and Rs 350 on NSE against an issue price of Rs 263.

The company, a leading non-banking financial company (NBFC) specializing in retail loans, received an impressive response for its IPO, with a subscription rate of 117.19 times.

Analysts noted that the company's focus on serving underserved households and businesses positions it well in the competitive Indian retail lending market.


"While Northern Arc Capital has demonstrated growth in revenue and profit, challenges such as negative cash flow and a high debt-to-equity ratio need to be considered," said Shivani Nyati, Head of Wealth, Swastika Investmart.
Net proceeds from the IPO are proposed to be utilized to meet future capital requirements for onward lending.

The company is a diversified financial services platform established primarily to cater to the varied retail credit needs of underserved households and businesses in India.

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Its business model spans different offerings, sectors, products, geographies, and borrower categories. As of March 2024, the company has facilitated over Rs 1.73 trillion in financing, reaching more than 10 crore people across India.

Northern Arc employs a customized risk management system across all sectors and channels, supported by an extensive data repository of over 35.17 million data points. These data-driven insights, combined with secondary sources and on-field monitoring, enhance the company’s risk models.

According to a CRISIL report, the company reported one of the lowest gross non-performing assets (GNPA) at 0.45% and net non-performing assets (NNPA) at 0.08% as of FY24.

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In FY24, the company's net interest income (NII) rose 67% year-on-year to Rs 986 crore, while net profit increased 31% year-on-year to Rs 318 crore.

ICICI Securities, Axis Bank and Citigroup Global Markets India were the book running lead managers for the IPO, while Kfin Technologies was the registrar.