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Northern Arc Capital IPO Details: Date, Share Price, Size, GMP & Review

Northern-Arc-Capital-IPO-Details-Date-Share-Price-Size-GMP-&-Review

Northern Arc Capital – About the Company

Northern Arc Capital is a diversified financial services company mainly focused on the diverse retail credit requirements of under-served households and businesses in  India. It offers financial services like MSME finance, microfinance, vehicle finance, consumer finance, affordable housing finance and agricultural finance.

Northern Arc Capital operates through three primary channels, (i) Lending; (ii) Placements; and (iii) Fund Management which are delivered through its proprietary technology stack, enable streamlined and efficient digital financing solutions, and offer access to credit to the under-served categories of India across our focused sectors.

Northern Arc Capital IPO Objectives

By this IPO Company plans to issue Equity shares of Rs 5000 mn (entirely fresh issue) and also OFS (offer for sale) of 21,052,629 shares as stated in DRHP. Primary objective behind this IPO is to fulfill requirements towards working capital along with to increase its brand name and public awareness.

Northern Arc Capital IPO Details:

IPO Open Date To be Updated
IPO Close Date To be Updated
Basis of Allotment To be Updated
Listing Date To be Updated
Face Value To be Updated
Price To be Updated
Lot Size To be Updated
Total Issue Size To be Updated
Fresh Issue [.] Shares, aggregating up to Rs 500.00 crore
Offer For Sale 21,052,629 Shares, aggregating up to Rs XXX.00 crore
Issue Type Book Built Issue IPO
Listing At BSE & NSE
QIB Shares Offered To be Updated
Retail Shares Offered To be Updated
NII (HNI) Shares Offered To be Updated

 

Northern Arc Capital IPO Issue Price & Size

The issue price of Northern Arc Capital IPO is in the range of Rs XXX to Rs XXX. The total issue size of the IPO is Rs XXXX, out of which Rs 500 crore will be a fresh issue of shares and the remaining Rs XXXX will be the offer for sale by the shareholders.

Northern Arc Capital IPO Launch Date

Northern Arc Capital IPO will be open on (DATE) and close on the (DATE). All types of investors can bid between these dates through their eligible categories.

Northern Arc Capital Financial Statements:

Particulars (Rs in Million) FY24 (6M) FY23 FY22 FY21 CAGR
Revenue from Operations 8,380.70 13,049.71 9,095.39 6,811.71 38.41%
Other Income 68.08 62.29 70.06 41.16
Total Income 8,448.78 13,112.00 9,165.45 6,852.87 38.32%
Operational Expenses 2353.47 3095.59 1871.83 2261.75
Other expenses 639.12 1090.50 607.25 294.07
EBITDA 5456.19 8925.91 6686.37 4297.05 44.13%
EBITDA Margin% 65.10% 68.40% 73.51% 63.08%
Depreciation 76.35 120.44 95.76 67.40
Interest 3383.27 5574.49 4106.72 3229.68
Share of loss from Associates -10.57 -18.73 - -
Profit Before Tax 1986.00 3212.25 2483.89 999.97  
Total tax 485.13 790.11 664.51 234.01
Profit After Tax 1500.87 2422.14 1819.38 765.96 77.83%
PAT Margin% 17.91% 18.56% 20.00% 11.24%  
EPS Diluted (Rs) 10.97 17.38 13.09 5.35  

Source: DRHP

Northern Arc Capital Financial Performance

The revenue from operations of Northern Arc Capital in the first six months of FY24 is Rs 838.07 crore, while EBITDA and Profit After Tax for the same period stood at Rs 545.62 crore and Rs 150.08 crore respectively. For the same period, the company has enjoyed the EBITDA margin and PAT margin of 65.1% and 17.9% with earnings per share (EPS)of Rs 10.97 on an equity diluted basis.

Though, talking about the previous three years' growth the revenue from operations of the Northern Arc Capital grew at a CAGR of 38.4% from Rs 681.17 crore in FY21 to Rs 1304.97 crore in FY23. While owing to better operational efficiency the EBITDA of the company for the same period grew at a CAGR of 44% from Rs 429.7 crore in FY21 to Rs 892.59 crore in FY23.

However, the Net Profit or Profit After Tax of the company has grown very well at a CAGR of 77.8% from FY21 to FY23. In FY21 the PAT of the company was Rs 76.59 crore which rose to Rs 242.21 crore in FY23.The EBITDA marginof the company in FY23 was 68.4% while the PAT margin during the same period was 17.9% which has improved much better from 11.24% in FY21.

Northern Arc Capital IPO Promoters & Shareholding of the Company

LeapFrog Financial Inclusion India (II) Ltd, Augusta Investments II Pts. Ltd and Eight Roads Investments Mauritius II Limited are the promoters or you can major shareholders of the Northern Arc Capital holding 22.53%, 19.48% and 10.24% stakes respectively. For the names of the other shareholders and their holding details see the table below.

S.No. Name of the Shareholder No. of Equity Shares held on a fully diluted basis %  of the pre-Offer Equity Share capital on a fully diluted basis
1 LeapFrog Financial Inclusion India (II) Ltd 2,99,52,665 22.53%
2 Augusta Investments II Pte. Ltd 2,58,87,110 19.48%
3 Eight  Roads  Investments  Mauritius  II  Limited 1,36,10,748 10.24%
4 Dvara  Trust  (represented  by  its corporate trustee,  Dvara Holdings 99,29,257 7.47%
5 Accion Africa-Asia Investment Company 76,99,529 5.79%
6 360 ONE Special Opportunities Fund –Series 4 75,38,980 5.67%
7 Sumitomo Mitsui Banking Corporation 70,04,364 5.27%
8 360 ONE Special Opportunities Fund 67,21,940 5.06%
9 360 ONE Special Opportunities Fund –Series 5 61,85,901 4.65%
10 361 ONE Special Opportunities Fund –Series 6 61,25,875 4.61%
11 362 ONE Special Opportunities Fund –Series 7 49,86,680 3.75%
12 363 ONE Special Opportunities Fund –Series 8 21,93,541 1.65%
13 KP Corporate Solutions Ltd (Northern Arc Welfare Trust) 17,32,273 1.30%
  Total 12,95,68,863 97.47%

Source: DRHP

Why Invest in Northern Arc Capital IPO?

While investing in a listing company you perform both fundamental analysis and technical analysis to know the various factors of the company. However, here you can perform only the fundamental analysis as the stock of Northern Arc Capital is not listed now, and without the historical price of stock price movement, it is not possible to perform the technical analysis.

Also Read: Technical Analysis vs Fundamental Analysis: Which is Better

In this case, you can analyse the fundamental factors of the company that will help you to know its strengths and risk factors that the company can face while operating its business. In respect of the same, we brought here the strength and risk that are associated with Northern Arc Capital

Also Read: What are the Risk Factors Involved in Applying for an IPO

Competitive Strengths:

  • As per the CRISIL Report,  in terms of the credit to GDP ratio, India has a low credit penetration compared with other developing countries indicating a significant untapped potential. The company also believes there is much opportunity for capitalizing on the large potential for growth in the retail credit market, particularly in the rural and semi-urban areas.
  • Northern Arc Capital is operating with a large ecosystem of partners and a data and technology platform creating strong network effects with a scalable and diversified platform.
  • To ensure its funding requirements the company has maintained a well-diversified funding profile that is underpinned by established relationships with its lenders and investors, a proactive liquidity management system and a strong credit rating providing a strong base for funding.
  • It has also planned to expand its footprint to better reach and serve underserved households and businesses in the focused sectors in India by strengthening its origination channels and increasing the use of in-house technology and data-enabled products and platforms.
  • The company has intended to identify incremental opportunities across sectors and within sectors across products like climate lending and gold loans enhancing its ESG risk management systems.
  • The company has continued to be focused on expanding its Direct to direct-to-customer lending channel to capitalize on the growing retail credit market in India.
  • Moreover, the company has also focused on credit quality to manage credit costs efficiently continue to diversify the source of funds and widen the lender base to scale the borrowing requirements while lowering costs.
  • Furthermore, with the strategy of organic growth, the company has maintained and increased its position as a leading platform in the financial ecosystem through inorganic growth opportunities. The companies from time to time evaluate and pursue strategic acquisitions, alliances, partnerships and joint ventures, including portfolio acquisitions to grow their business.
  • At the financial end, the company has shown significant growth in revenue, operating income and net income as well. Its revenue from FY21 to FY23 has grown at a CAGR of 38% and EBITDA has grown at a CAGR of 44% during the same period. However, the company has reduced the financing cost and its net profit has as exceptionally grown at a CAGR of 77.8% in the same period.

Risks:

  • Northern Arc Capital operates in a highly competitive industry having multiple financial and non-financial companies and its inability to compete effectively may adversely affect the business, reputation, results of operations, cash flows and financial condition of the company.
  • As the company is involved in financing and loans, its business requires funds regularly, and any disruption in the funding sources would have a material adverse effect on its business, which will also affect the business operations, cash flows and financial condition of the company.
  • The company has offered loans to various borrowers if they default on their repayment obligations which leads to increased levels of non-performing assets ("NPA"), related provisions and write-offs, that will adversely affect the cash flows and financial condition of the company.
  • The financial performance of the company is highly vulnerable to interest rate risk, and an inability to manage the interest rate risk may have a material adverse effect on the net interest income, operations and cashflows of the company.
  • There are outstanding legal proceedings/matters involving the Company and its Subsidiaries. Any unfavourable outcome in such legal proceedings/ matters may affect the reputation of the company which will also affect the business operations and financial condition of the company.

Northern Arc Capital IPO Grey Market Premium (GMP)

The Grey Market Premium (GMP) is the price over the issue price of an IPO that an investor is ready to pay in the grey market. GMP is determined by the speculator as per the demand and supply of shares in the grey market. And as per the demand GMP keeps fluctuating till the listing day.

Also Read: What is Grey Market Premium in IPO: How is GMP Calculated &Reliable

As per the various online sources, the Northern Arc Capital IPO GMP is hovering at Rs XXX, which shows the share of Northern Arc Capital is likely to list at Rs XXXX with premium or discount over the issue price. GMP is an unofficial ecosystem, hence it is not a reliable factor to know the intrinsic value of share of any company, as there are various factors that affect the stock market and individual stock prices.

Also Read: What are the Top Factors Affecting the Stock Market in India

Northern Arc Capital IPO Review & Analysis

In full-year FY23 the earnings per share (EPS)of the Northern Arc Capital was Rs 17.38, while in the first six months of FY24, the EPS stood at Rs 10.97. These ESPs can be used to evaluate and compare the share price of Northern Arc Capital with its listed peer group companies. However, the issue price of the company is unknown hence; it is not possible to compare it with any other listed entity.

Also Read: What to Check Before Buying IPO: Things to Know & Is it Safe

While considering the valuation of share price if the Northern Arc Capital IPO is issued at a premium or means to way at an expensive price compared to its peer group companies, then you can avoid applying in this IPO. However, if the Northern Arc Capital IPO is issued at a discount then you can subscribe or apply for the IPO with a medium to long-term investment point of view.

Also Read: Benefits of Investing in the Stock Market: Advantages of Share Market

How to Apply for Northern Arc Capital IPO?

To apply in the Northern Arc Capital IPO you need a trading account and demat account with the registered broker. If you don't have both of these accounts, you can apply here at Moneysukh with the free trading account and best features demat account at the lowest brokerage charges.

Also Read: How to Convert Physical Shares Into Demat: Stepwise Procedure

Moneysukh is one of the best discount brokers in India offering one-stop trading and investment solutions for the equity market, commodity market and forex market. It provides the best online trading platform with various trading software and algorithms making the trading and investing experience not only trouble-free but very fast, secure and user-friendly.

Also Read: Advantages of Best Online Trading Platforms or Apps in India

Steps to Apply for Northern Arc Capital IPO:

Step 1: To apply use your computer, laptop or smartphone and open a browser.

Step 2:In your browser type trade.moneysukh.com and log in with your User ID & password.

Step 3:Now find the IPO section and select the Northern Arc Capital IPO.

Step 4:Here have to fill in the various details like price, quantity, and so on.

Note: When you bid in any IPO, make sure to bid at the cutoff price and then submit your application. 

Step 5:Finally, make the required payment and submit your IPO application.

How to Check Northern Arc Capital IPO Allotment Status?

Once the bidding process is completed and the basis of the allotment date arrives, you can check the allotment status of the Northern Arc Capital. To check the allotment status you need IPO application details and PAN number, which you can use and check through NSE, BSE or Moneysukh.

Also Read: How to check IPO allotment status on NSE, BSE through Moneysukh

What happens if the IPO is oversubscribed, yes if Northern Arc Capital IPO got the application into multiple folds, then your chances of getting the allotment becomes low. However, if you are applying through the retail category or HNI category you can improve your chances of getting the allotment.

When the allotment process is done, investors who don't get any allotment will get their money refunded back into their bank account or the fund will be unblocked if they have applied through ASBA. However, if you manage to get the allotment you will get the allotted shares into your demat account before the listing day, which you can either sell in the secondary market or keep for long-term view.

Also Read: What to Know Before Investing in Stocks: 10 Things to Consider

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