Northern Arc Capital IPO Blows Up with 31x Subscription on Day 4; GMP Drops to 60%—Find Out Why

The Northern Arc Capital IPO has received strong interest, being subscribed 31.5 times by the last day of bidding. Non-institutional investors showed the most interest, subscribing 84.8 times, followed by retail investors at 24 times and Qualified Institutional Buyers (QIBs) at 6.3 times. Investors can bid for the IPO until September 19.

Before the IPO, the company raised ₹228 crore from anchor investors. The public issue includes an offer for sale of ₹277 crore and a fresh issue of up to ₹500 crore.

Price Band and GMP

The price band for Northern Arc Capital’s IPO is set at ₹249-263 per share, with 57 shares in each lot. Initially, the grey market premium (GMP) was ₹200, but it dropped to ₹160, which is about 60% higher than the listing price.

Analyst Recommendations

Analysts have advised subscribing to the IPO due to the company’s growth potential and its strong position in India’s credit market. BP Wealth highlighted the company’s solid credit process and consistent returns across business cycles. Nirmal Bang noted its low valuation compared to peers, adding that its diversified funding and improved credit rating support expansion.

Company Overview

Northern Arc Capital is a financial services company focusing on providing credit to underserved households and businesses in India. Its model is diversified across sectors and borrower categories. As of March 2024, the company facilitated ₹1.73 trillion in financing, reaching over 10 crore people across India. It uses a data-driven risk management system to maintain asset quality, with one of the lowest non-performing asset (NPA) rates in the industry—0.45% GNPA and 0.08% NNPA.

In FY24, Northern Arc Capital’s net interest income increased by 67% year-on-year to ₹986 crore, while net profit rose by 31% to ₹318 crore.

ICICI Securities, Axis Bank, and Citigroup Global Markets India are the lead managers for this IPO, while Kfin Technologies is the registrar.