Northern Arc Capital Limited, a leading non-banking financial company (NBFC) specializing in providing financial services to small and medium enterprises (SMEs), is set to launch its Initial Public Offering (IPO) in September 2024.
Key Details:
- Issue Type: Main Board IPO
- Issue Size: ₹2,000 crores
- Face Value : ₹10 per share
- Price Band : ₹249 to ₹263 per share
- Expected Listing Date: 24 September 2024
- Lead Managers: To be announced
- Registrar: Kfin Technologies Limited
Timeline
| IPO Open Date: | September 16, 2024 |
| IPO Close Date: | September 19 , 2024 |
| Basis of Allotment: | September 20, 2024 |
| Refunds: | September 23, 2024 |
| Credit to Demat Account: | September 23, 2024 |
| IPO Listing Date: | September 24, 2024 |
About Company
Northern Arc Capital Limited is a leading non-banking financial company (NBFC) in India, specializing in providing financial services to small and medium enterprises (SMEs). The company offers a range of financial products, including loans, invoice discounting, and supply chain finance.
Core Business:
- SME Financing: Northern Arc Capital focuses on providing financial solutions to SMEs, helping them meet their working capital and growth requirements.
- Asset-Backed Lending: The company primarily engages in asset-backed lending, using receivables or inventory as collateral.
Market Position:
- Northern Arc Capital is a well-established player in the SME financing market in India.
- The company has a strong focus on providing innovative financial solutions to SMEs.
- Northern Arc Capital has a reputation for its risk management capabilities and efficient operations.
Future Outlook:
- The Indian SME sector is expected to grow, driven by increasing entrepreneurship and government initiatives.
- Northern Arc Capital aims to expand its product offerings and geographic reach to cater to the evolving needs of SMEs.
- The company may also explore new business lines or partnerships to drive growth
Here are some resources to learn more about company
Objective
The primary objectives of the Northern Arc Capital Limited IPO are:
- Raising Capital: The company aims to raise ₹2,000 crores through the IPO, which will be used for:
- Expansion: Funding the expansion of its operations and geographic reach.
- Working Capital: Meeting the day-to-day operational expenses of the business.
- General Corporate Purposes: Supporting other growth initiatives and strategic investments.
- Brand Visibility: The IPO will increase the visibility of Northern Arc Capital among investors and the general public, enhancing its brand recognition and credibility.
- Part Exit for Existing Shareholders: The IPO includes an Offer for Sale (OFS) component, allowing existing shareholders to partially exit their investment.
By achieving these objectives, Northern Arc Capital Limited aims to strengthen its financial position, expand its business, and enhance its market presence.mited aims to strengthen its financial position, expand its business, and enhance its market presence.
POSITIVE
- Growth Potential: The Indian SME sector is expected to grow, providing opportunities for Northern Arc Capital.
- Experienced Management: The company has a team of experienced professionals with expertise in SME financing.
- Focus on SMEs: Northern Arc Capital’s specialization in SME financing caters to a growing and underserved market segment.
- Asset-Backed Lending Model: This model provides a relatively stable revenue stream.
NEGATIVE
- Credit Risk: Lending to SMEs involves credit risk, and the company’s profitability can be affected by defaults.
- Competition: The SME financing market is competitive, with both traditional banks and other NBFCs.
- Regulatory Changes: Changes in government regulations related to NBFCs can impact the industry.
- Economic Downturns: Economic downturns can affect the demand for SME financing.
Financial Review of Northern Arc Capital
So, How Does Northern Arc Capital IPO Fare in Terms of Financials ?
| Period Ended | 31 Mar 2024 | 31 Mar 2023 | 31 Mar 2022 | |||||||||||||||||||||||||||
| Assets | 11,707.66 | 9,371.57 | 7,974.12 | |||||||||||||||||||||||||||
| Revenue | 1,906.03 | 1,311.2 | 916.55 | |||||||||||||||||||||||||||
| Profit After Tax | 317.69 | 242.21 | 181.94 | |||||||||||||||||||||||||||
| Net Worth | 2,314.35 | 1,955.39 | 1,739.04 | |||||||||||||||||||||||||||
| Reserves and Surplus | 2,123.37 | 1,784.22 | 1,555.3 | |||||||||||||||||||||||||||
| Total Borrowing | 9,047.76 | 7,034.57 | 5,982.96 | |||||||||||||||||||||||||||
| Amount in ₹ Crore | ||||||||||||||||||||||||||||||
Key Observations:
Based on the limited financial data provided, here’s a brief observation on Northern Arc Capital Limited’s financial performance:
- Growth: It’s difficult to determine the company’s growth rate as data for only one year is available.
- Profitability: Profit After Tax has increased from ₹ 181.94 crore in March 2022 to ₹ 317.69 crore in March 2024.
- Disclaimer: This is a limited financial review based on the provided data. It’s recommended to analyze the full IPO prospectus and consult with a financial advisor before making any investment decisions.
Northern Arc Capital IPO Valuation :
| KPI | Values |
|---|---|
| Debt/Equity | 3.9 |
| RoNW | 13.32% |
| P/BV | 1.49 |
Northern Arc Capital IPO – SWOT Analysis
Strengths
- Focus on SMEs: Specialization in SME financing caters to a growing and underserved market segment.
- Asset-Backed Lending: This model provides a relatively stable revenue stream.
- Experienced Management: The company has a team of experienced professionals with expertise in SME financing.
- Technology Adoption: Leveraging technology for efficient loan processing and risk management.
Weaknesses
- Credit Risk: Lending to SMEs involves credit risk, and the company’s profitability can be affected by defaults.
- Competition: The SME financing market is competitive, with both traditional banks and other NBFCs.
- Regulatory Changes: Changes in government regulations related to NBFCs can impact the industry.
Opportunities
- Growing SME Sector: The Indian SME sector is expected to grow, providing opportunities for Northern Arc Capital.
- Product Diversification: Expanding into new product areas within SME financing.
- Geographic Expansion: Entering new regions or markets to increase reach.
- Technology Adoption: Leveraging technology for innovative products and improved customer experience.
Threats
- Economic Downturns: A slowdown in the economy can impact demand for SME financing.
- Competition from Banks: Traditional banks may increase their focus on SME lending.
- Regulatory Changes: Changes in government policies or regulations related to NBFCs can impact the industry.
COMPETITIVE ANALYSIS: MARKET PEERS
Northern Arc Capital Limited operates in a competitive market for SME financing in India. Understanding its key competitors is essential for assessing the company’s market position and growth potential.
Key Competitors
- Bajaj Finance Limited: A leading NBFC with a focus on consumer finance and SME lending.
- HDFC Limited: A large non-banking financial company offering a wide range of financial services, including SME loans.
- Reliance Commercial Finance: A subsidiary of Reliance Industries, providing financial services to SMEs and corporates.
- Cholamandalam MS General Insurance Company Limited: An NBFC specializing in SME financing and insurance products.
Northern Arc Capital IPO GMP
- Grey market premium as on 19-09-2024 = ₹ 160 /Share
Disclaimer:
- IPO Grey Market Premium (Northern Arc Capital Limited IPO GMP) mention is valid for the specific date as mentioned in the header.
- We are not buying and selling IPO forms on IPO Grey Market.
- Don’t decide to subscribe to an IPO just based on the initial price, as it can change before the listing.Subscribe only considering Fundamentals of the companies.
Northern Arc Capital Limited IPO
🔴 Live Subscription Status 🔴
19/09/2024 5:00 PM
| | NO OF SHARES OFFERED | Day 1 | Day 2 | Day 3 | Day 4 |
| Qualified Institutional Buyers(QIBs) | 87,02,031 | 0.02 | 0.20 | 0.17 | 240.79 |
| Non Institutional Investors(NIIs) | 58,01,354 | 4.66 | 21.71 | 16.30 | 142.14 |
| Retail Individual Investors(RIIs) | 43,51,016 | 4.09 | 10.82 | 6.43 | 30.50 |
| Employees | 5,90,874 | – | 2.24 | 1.75 | 7.08 |
| Total | 1,01,52,384 | 3.08 | 9.98 | 6.67 | 110.56 |
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