Retail investors had subscribed 1.55 times in the issue, followed by non-institutional investors, who reserved 1.18 times. Meanwhile, qualified institutional buyers (QIBs) had bid for only 6,213 shares of the 58.48 lakh shares reserved for them.
The issue will be available for investors to bid till September 19. The company has raised Rs 228 crore from anchor investors ahead of the opening of the issue.
The public issue consists of an offer for sale for an aggregate of up to Rs 277 crore and a fresh issue of up to Rs 500 crore.
Northern Arc Capital IPO Price Band
The company has fixed a price band of Rs 249-263 per share, where investors can bid for 57 shares in one lot.
Northern Arc Capital GMP IPO
Prior to listing, Northern Arc Capital’s grey market premium was Rs 158, a 60% premium on the first day of the bidding process.
Northern Arc Capital IPO Review
Analysts advised investors to subscribe to the IPO as the company is well positioned for growth, leveraging sector expertise, digital platforms and a strong partner ecosystem to access India’s underpenetrated credit markets. “The issue is valued at a P/BV of 1.49x at the upper price band based on FY24 book value, which is fair. We, therefore, recommend a ‘Subscribe’ rating for the issue on the basis of a differentiated credit underwriting process, which maintains its strong asset quality and consistent risk-adjusted returns across business cycles,” BP Wealth said.
“Its diversified funding sources and improved credit rating support sustainable expansion, despite high operating costs. Northern Arc has a respectable ROA (3%) and ROE (14.5%) along with a loan growth of 28% CAGR between FY22 and FY24. The price to book ratio (1.8x) indicates that the company is undervalued compared to its peers. Hence, we recommend subscribing to the issue,” Nirmal Bang said.
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Other details
The company proposes to use the net proceeds to meet future capital needs for future borrowings.
Northern Arc is a diversified financial services platform primarily created with a mission to address the diverse retail credit needs of underserved households and businesses in India.
Its business model is diversified across offerings, sectors, products, geographies and borrower categories. As of March 2024, the company had facilitated over Rs 1.73 trillion in financing, reaching over 10 million people across India.
Northern Arc employs a tailored risk management system across all sectors and channels, supported by its extensive data repository of over 35.17 million data points. These data-driven insights, combined with secondary sources and field monitoring, strengthen the company’s risk models.
According to a CRISIL report, the company had one of the lowest gross non-performing assets (GNPA) of 0.45% and net non-performing assets (NNPA) of 0.08%, as of FY24.
In FY24, the company’s net interest income (NII) rose 67% YoY to Rs 986 crore, while net profit rose 31% YoY to Rs 318 crore.
ICICI Securities, Axis Bank and Citigroup Global Markets India are the lead managers for the IPO, while Kfin Technologies It’s the registrar.
(Disclaimer: The recommendations, suggestions, views and opinions of the experts are their own and do not represent the views of Economic Times)
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