Northern Arc Capital Limited, a key player in India’s retail credit market, reported robust growth in its Q1 FY25 results for the quarter ended June 30, 2024. The company demonstrated a solid performance, reflecting its continued focus on diversification and risk management across its business verticals.
Key Highlights:
- Assets Under Management (AUM): Northern Arc’s AUM grew by 30.5% CAGR since June 2021, reaching ₹8,979 crore as of June 2024, compared to ₹7,044 crore in June 2023. This growth has been driven by the company’s diverse lending portfolio, including MSMEs, microfinance institutions (MFIs), consumer finance, vehicle finance, affordable housing finance, and agriculture loans.
- Profitability: The company’s profit after tax (PAT), excluding non-controlling interest (NCI), grew at a CAGR of 39.5% since Q1 FY22. For Q1 FY25, Northern Arc reported a PAT of ₹93 crore, reflecting its consistent profitability quarter-on-quarter.
- Revenue: Northern Arc reported revenue from operations at ₹495 crore, continuing its strong revenue growth with a 37.3% CAGR from Q1 FY22 to Q1 FY25.
- Risk Management & Asset Quality: The company maintained one of the lowest non-performing assets (NPA) rates in the industry, with a gross NPA (GNPA) ratio of 0.47% and a net NPA (NNPA) ratio of 0.12%. The provisioning coverage ratio for Stage 3 assets increased to 74%, ensuring adequate coverage of its potential risks.
- Diversification: Northern Arc continues to expand its retail lending book, which now constitutes 52% of its total AUM, compared to 17% in June 2021. This shift highlights the company’s strategic move toward serving more individual customers directly.
- Technology Integration: The company has been leveraging its data-driven technology platform to enhance credit assessment and risk analysis, driving operational efficiency and improving customer experience.
Outlook & Future Growth: Northern Arc plans to further expand its direct-to-customer lending segment and deepen its relationships with originator partners across the country. With a clear focus on managing risks, improving credit quality, and leveraging technology, the company remains committed to maintaining its growth trajectory while supporting India’s underserved households and businesses.
Management Commentary: Ashish Mehrotra, Managing Director and CEO of Northern Arc Capital, stated, “We are pleased with our strong financial performance in Q1 FY25, which reflects our focus on diversification and proactive risk management. Our continued emphasis on technology and customer-centricity positions us well for sustained growth in the coming quarters.”
Disclaimer: This article is for informational purposes only and should not be construed as investment advice. Please consult with a financial expert before making any investment decisions.
