Northern Arc Capital Ltd, a prominent player in the non-banking financial company (NBFC) sector, is opening its doors to public investment through an Initial Public Offering (IPO). Known for its significant contribution to the Indian retail credit market, this move marks a pivotal moment in the company’s growth trajectory. Here’s a comprehensive look at Northern Arc Capital IPO and what potential investors need to know.
Company Overview
Northern Arc Capital is a leading NBFC, recognized for its role in the financial inclusion space. Over the past 15 years, the company has facilitated financing exceeding ₹1.73 trillion, impacting more than 101.82 million lives. Operating with a robust ecosystem, Northern Arc partners with 328 originator partners, 50 retail lending partners, and 1,158 investor partners. The company leverages its proprietary technology and vast data repository, containing over 35.17 million data points, to deliver its services across various sectors and geographies.
Northern Arc Capital IPO Details
The Northern Arc Capital IPO aims to raise ₹777 crore, with a price band set between ₹249 and ₹263 per share. The offering is a mix of a fresh issue worth ₹500 crore and an Offer For Sale (OFS) of up to 10,532,320 equity shares valued at ₹277 crore by existing shareholders. The public subscription period is from September 16 to September 19, with shares expected to be listed on the BSE and NSE on September 24.
Share Allocation
Shares are allocated across different investor categories as follows: the IPO offers a lot size of 57 equity shares, and investors can apply in multiples thereof. A portion of the shares has been reserved for anchor investors, who have already invested ₹229 crore at the upper end of the price band. Key anchor investors include SBI General Insurance Company, SBI Life Insurance Company, and Reliance General Insurance Company.
First Day Performance and Subscription Status
On the first day of the IPO, Northern Arc Capital saw a subscription rate of 0.70 times, with retail individual investors (RIIs) leading the way at a subscription rate of 1.05 times. The grey market premium (GMP) for the shares is trading at ₹158 above the issue price, indicating a promising 60.08% listing gain, reflecting strong investor sentiment.
Financial Performance and Growth
Northern Arc Capital has demonstrated solid growth and financial stability, showcasing a diversified business model across sectors and geographies. It provides credit access to underserved households and businesses through a multi-channel approach. The company’s strategic focus on digital platforms and a robust partner ecosystem positions it well for continued expansion and market penetration.
Comparison with Industry Peers
Valued at a P/BV of 1.4x, Northern Arc Capital is considered undervalued compared to its peers. With strong ROA and ROE figures, alongside a loan growth rate of 28% CAGR over FY22-24, it presents a compelling investment opportunity. Its asset quality is notable, with low Gross Non-Performing Assets (GNPA) and Net Non-Performing Assets (NNPA), strengthening its market position.
Expert Reviews and Recommendations
Brokerage firms such as Anand Rathi and Nirmal Bang have issued a ‘subscribe’ recommendation for the IPO. They cite the company’s well-established market presence, diversified funding sources, and reasonable valuation as key factors for their positive outlook. Experts highlight Northern Arc’s impressive asset quality and market potential as reasons to consider long-term investment in its IPO.
Conclusion
Northern Arc Capital IPO offers investors a chance to participate in the growth of a leading NBFC in India. With its strong market position, impressive financial performance, and strategic growth plans, Northern Arc Capital is poised for success. Investors are encouraged to assess their individual risk tolerance and consult with financial advisors before making investment decisions.
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FAQ
1. What is the price range for Northern Arc Capital’s IPO?
The price range for Northern Arc Capital’s IPO is set between ₹249 and ₹263 per share.
When does the IPO subscription open and close?
The IPO subscription opens on September 16 and closes on September 19.
