Northern Arc Capital Limited — PPTs, 20-05-2025: Investor Presentation

1. Financial Highlights:

Northern Arc Capital reported a Gross Transaction Volume (GTV) of INR 35,058 Cr and Lending AUM of INR 13,634 Cr, reflecting steady growth. Profit after tax was INR 305 Cr, with a Return on Assets (RoA) of 2.4% and Return on Equity (RoE) of 10.0%. Pre-provision operating profit rose to INR 791 Cr, supported by a healthy Net Interest Margin (NIM) of 9.1%. Operating expenses stood at 3.6% of total assets. Asset quality remains solid, with gross NPA at 0.93% and net NPA at 0.36%. The company boosted capital by INR 882 Cr, raising net worth to INR 3,434 Cr.

2. Strategic Initiatives & Growth Drivers:

The direct-to-customer lending segment now accounts for 52% of AUM, driven by strong CAGR in MSME (35%), Consumer Finance (120%), and Rural Finance (78%) since FY21. Investments in underwriting technology and ML-powered platforms like NuScore and nPOS enhance risk assessment and loan onboarding. Expansion to 360 branches and 54 partnerships supports multi-channel distribution and a granular portfolio strategy.

3. Business Developments:

Funding diversification continued with borrowings reaching INR 9,860 Cr. Fee-based assets under management hit INR 3,158 Cr, with placement volumes at INR 12,393 Cr. Growth in alternative retail debt platforms shows over 45,000 registered investors. Strong collection and risk systems back sustainable portfolio growth.

4. Market Position & Competitive Advantage:

Northern Arc leads in financing underserved retail credit markets, leveraging over a decade of proprietary data, robust risk models, and a diverse portfolio spanning MSME, consumer, rural, and intermediate segments. Its strong technology stack and broad investor base create scale advantages and differentiation.

5. Investor Implications:

Improving profitability, sound asset quality, strong capitalization, and tech capabilities point to positive growth potential in India’s retail credit space. Expansion of direct lending and fee-income streams lowers concentration risk. Execution on portfolio diversification and asset quality under changing macro conditions remains key to watch.