Northern Arc Capital shares surged over 5% in early morning trade after DAM Capital initiated coverage on the company with a buy rating and set a target price of ₹335. As of 9:26 AM, the shares were trading 5.15% higher at Rs 259.10
The brokerage highlighted that Northern Arc is attractively valued at 0.9 times FY27 estimated book value and 6.8 times FY27 estimated earnings, making it a compelling investment in India’s financial services sector.
According to DAM Capital, Northern Arc is well positioned to benefit from structural growth in India’s lending ecosystem. The company is experiencing a growing share of direct-to-customer lending, and lower interest rates are expected to support margin expansion. Its fund management and placement business is also projected to boost fee income and improve return on assets.
On asset quality, DAM Capital expects pressures in microfinance loans to ease from the second half of FY26, with full normalization anticipated by FY27. The brokerage projects earnings growth at a 39% compound annual rate (CAGR) over FY26–27, driven by stronger margins, diversified income streams, and improving asset quality.
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