Northern Arc Capital IPO opens on September 16, 2024, with a price band of ₹249-₹263 per share. Learn about key details, financial performance, anchor investors, and more before investing.
The financial market is buzzing with excitement as Northern Arc Capital, a leading non-banking financial company (NBFC) in India, prepares for its initial public offering (IPO) on September 16, 2024. Known for its focus on financial inclusion and lending to underserved sectors, Northern Arc Capital is offering investors a unique opportunity to participate in its growth story.
Company Background
Northern Arc Capital has become a significant player in India’s financial inclusion landscape. As an NBFC registered with the Reserve Bank of India (RBI), the company specializes in extending credit to low-income households and small businesses that often struggle to secure loans from traditional banks. Northern Arc’s dual approach includes direct lending and partnerships with Originator Partners, helping the company reach a broader audience.
Objectives of the IPO
The primary objective of the Northern Arc Capital IPO is to bolster the company’s capital base. The funds will be used to:
- Expand the company’s lending portfolio
- Support future growth initiatives
- Strengthen financial stability
- Meet general corporate purposes
Northern Arc Capital IPO Details
| IPO Open Date: | September 16, 2024 |
| IPO Close Date: | September 19, 2024 |
| Face Value: | ₹10 Per Equity Share |
| IPO Price Band: | ₹249 to ₹263 Per Share |
| Issue Size: | Approx ₹777 Crores |
| Fresh Issue: | Approx ₹500 Crores |
| Offer for Sale: | Approx 10,532,320 Equity Shares |
| Issue Type: | Book Built Issue |
| IPO Listing: | BSE & NSE |
| Retail Quota: | Not more than 35% |
| QIB Quota: | Not more than 50% |
| NII Quota: | Not more than 15% |
Northern Arc Capital IPO Market Lot
| Application | Lot Size | Shares | Amount |
|---|---|---|---|
| Retail Minimum | 1 | 57 | ₹14,991 |
| Retail Maximum | 13 | 741 | ₹194,883 |
| S-HNI Minimum | 14 | 798 | ₹209,874 |
| B-HNI Minimum | 67 | 3,819 | ₹1,004,397 |
Northern Arc Capital IPO Financial Report
| Period | Revenue | Expense | Profit After Tax | Assets |
|---|---|---|---|---|
| 2022 | ₹916.55 | ₹668.16 | ₹181.94 | ₹7,974.12 |
| 2023 | ₹1,311.2 | ₹988.10 | ₹242.21 | ₹9,371.57 |
| 2024 | ₹1,906.03 | ₹1,484.83 | ₹317.69 | ₹11,707.66 |
Financial Performance
Over the past few years, Northern Arc Capital has demonstrated impressive financial growth:
- Assets Under Management (AUM): Grew at an annual rate of 28% between FY22 and FY24
- Profit After Tax (PAT): Increased by 32% annually during the same period
- Net Interest Income (NII): Saw substantial growth due to the company’s expanding operations and effective management
The company’s consistent growth in AUM and profitability reflects its robust business model and efficient operations.
Key Strengths of Northern Arc Capital
Northern Arc Capital’s business strategy offers several key strengths that make it an attractive investment option:
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Diversified Loan Portfolio: The company’s loan book covers a range of sectors, reducing its exposure to any one industry.
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Strong Asset Quality: The company maintains a Gross Non-Performing Assets (GNPA) ratio of just 0.6%, with a Provision Coverage Ratio (PCR) of over 80% as of March 2024. This reflects Northern Arc’s prudent risk management practices.
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Focus on Underserved Markets: With a significant portion of its business focused on low-income households and small businesses, Northern Arc Capital is well-positioned to benefit from the rising demand for credit in Tier 2 and rural markets.
Risks and Challenges
Despite its strengths, Northern Arc Capital faces several challenges:
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Competition: The company competes with larger NBFCs and banks that have greater scale and resources.
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Macroeconomic Factors: Economic slowdowns or regulatory changes could negatively impact Northern Arc’s operations and financial performance.
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Smaller Scale: Compared to its larger peers, Northern Arc Capital operates on a relatively smaller scale, which may limit its ability to capture market share in the highly competitive NBFC sector.
Anchor Investors
The IPO has already garnered strong interest from anchor investors, including SBI Life and Reliance General Insurance, who together have invested ₹229 crore. Their involvement signals confidence in Northern Arc Capital’s business model and future growth potential.
Business Model and Strategy
Northern Arc Capital’s business model revolves around providing credit to underserved sectors through a combination of direct lending and partnerships with Originator Partners. The company uses advanced technology platforms to streamline the lending process, which helps enhance both efficiency and risk management.
By collaborating with a range of partners, Northern Arc Capital ensures a broad reach and deeper penetration in markets that are traditionally overlooked by larger financial institutions.
Industry Overview
The NBFC sector plays a vital role in India’s financial system, particularly in providing credit to sectors underserved by banks. As government policies continue to emphasize financial inclusion, the NBFC sector is expected to grow rapidly. Companies like Northern Arc Capital, with a proven track record in lending to low-income households and small businesses, are well-positioned to benefit from this trend.
Future Outlook
Looking ahead, the future for Northern Arc Capital looks bright. The company is well-positioned to capitalize on the growing demand for credit in underserved markets. Its focus on technology and expanding product offerings will play a critical role in driving future growth.
Investment Considerations
For potential investors, Northern Arc Capital presents an opportunity to invest in a company with:
- A strong financial track record
- A diversified loan portfolio
- A commitment to financial inclusion
However, it’s important to weigh the risks, including competition from larger players and potential macroeconomic challenges. As always, thorough due diligence is essential before making any investment decisions.
FAQs on Northern Arc Capital IPO
1. What is the Northern Arc Capital IPO?
The Northern Arc Capital IPO is an initial public offering where the company is issuing new shares to raise ₹500 crore and offering shares for sale worth ₹277 crore.
2. When will the Northern Arc Capital IPO open and close?
The IPO will open on September 16, 2024, and close on September 19, 2024.
3. What is the price band for the IPO?
The price band is set between ₹249 and ₹263 per equity share.
4. What is the minimum lot size for investing?
The minimum lot size is 57 equity shares.
5. What are the objectives of the IPO?
The IPO aims to strengthen the company’s capital base, support growth initiatives, and expand its lending portfolio.
6. Who are the anchor investors in this IPO?
Anchor investors include SBI Life and Reliance General Insurance, among others.
7. How has Northern Arc Capital performed financially?
The company has shown strong growth in AUM and PAT, with annual growth rates of 28% and 32%, respectively, between FY22 and FY24.
8. What are the key strengths of Northern Arc Capital?
Key strengths include a diversified loan book, strong asset quality, and a focus on underserved markets.
9. What risks are associated with this IPO?
Risks include competition from larger NBFCs, macroeconomic factors, and regulatory challenges.
10. When will the shares be listed on stock exchanges?
The shares are expected to be listed on BSE and NSE on September 24, 2024.
Disclaimer
This overview of the Northern Arc Capital IPO is provided for informational purposes only. It does not constitute investment advice or a recommendation to buy or sell shares. Investing in the stock market involves risks, including the risk of loss. Before making any investment decisions, please consult with a financial advisor and carefully review the IPO prospectus and other relevant documents. The information contained herein is based on available data and is subject to change.
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