Subscribe for Northern Arc Capital Ltd; Ajcon Global

Ajcon Global, has come out with its report on Northern Arc Capital Ltd. The research firm has recommended to “ Subscribe” the ipo in its research report as on September 13 2024.

Broker Research

September 16, 2024 / 11:49 IST

IPO

Ajcon Global, Northern Arc Capital Ltd

Northern Arc Capital Ltd (NACL) is a financial service platform that provides credit solutions to housholds and businesses in India. As of March 31, 2024, the company has financed Rs. 1.73 Million, which has impacted over 101.82 Million lives in India as of March 31st, 2024. It is one of the leading NBFC companies in terms of Asset Under Management (AUM) with a diversified business model across offerings, sectors, products, geographies and borrower categories. It also has the lowest credit cost amongst diversified NBFCs in India as of 31st March, 2024. The company has expertise in enabling credit across sectors namely - Micro, Small and Medium Enterprises (“MSMEs”) financing, Microfinance (“MFI”), Consumer Finance, Vehicle Finance, Affordable Housing Finance and Agricultural Finance. It has 14 years of experience in MSME, 15 years in MFI and 9 years into Consumer finance sector. NACL, caters to retail credit market through a multi channel approach which includes (I) providing financing from the balance sheet ("Lending") to Originator Partners in the form of loans or investments in their debt to enable on-lending to retail customers ("Intermediate Retail Lending") and directly to underserved households and businesses ("Direct to Customer Lending"), either in partnership with Retail Lending Partners or via their branch network, to provide MSME and rural finance. It has presence in 671 districts, 28 states and 7 union territories in India with AUM of Rs. 117,100.19 million, as of March 31st, 2024. (II) Providing credit for their originator partners through different financing products (“Placements”) with aggregate placement volume of Rs. 1,019,038.92 million as of March 31, 2024 (III) Providing debt management and portfolio management services (“Fund Management”) where Rs. 120,785.58 million had been deployed across 10 alternate investment funds (“AIFs”) and three Portfolio Management Service (“PMS”) funds as of March 31st, 2024.

Valuation and Outlook

At the upper price band of Rs. 263, the issue is priced at a P/E multiple of 13.36 its FY24 post IPO EPS of Rs. 19.69. We give a ‘SUBSCRIBE’ rating to the issue for the following reasons.

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