Northern Arc Capital IPO Day 4: GMP, key dates, subscription status to review. Should you apply or not?

The Northern Arc Capital IPO is the more popular choice among the two offerings in the mainboard segment. Market analysts believe that the company serves a demanding and highly profitable market segment. Despite the intention to repay, access to capital has historically been a challenge for the lower end of the Indian market. Northern Arc has the potential to increase its loan portfolio by 5-10 times over the next 4-7 years.

Despite recognising that Northern Arc Capital IPO seems superior to Arkade Developers, certain experts were disappointed with the anchor. 

The non-bank financial institution revealed on Friday that it had secured ₹229 crore from anchor investors, shortly before its shares were open for public subscription. Among the company's anchor investors are SBI General Insurance Company, SBI Life Insurance Company, Reliance General Insurance Company, Kotak Mahindra Life Insurance Company, Goldman Sachs (Singapore) Pte, Societe Generale, and Quant Mutual Fund.

The issue that opened on Monday, September 16 will close today (Thursday, September 19). The offer's price band is from ₹249 to ₹263 per equity share, and investors can choose to bid for a lot size of 57 equity shares and in multiples after that.

The IPO of Northern Arc Capital has allocated a maximum of 50% of shares in the public issue for qualified institutional buyers (QIB), at least 15% for non-institutional Institutional Investors (NII), and a minimum of 35% of the offer is set aside for retail investors. The employee reservation portion allows eligible employees to purchase equity shares at a discounted price of ₹24 per share, with 590,874 equity shares allocated to this segment.

The company was founded mainly to cater to the various needs of poor Indian households and companies for retail financing. Numerous financial services are available on this site. Their strategy over the past fifteen years has been to develop a unique and thorough play on India's retail credit ecosystem across a number of industries. As of March 31, 2024, they had enabled financing of over ₹1.73 trillion, having had an effect on over 101.82 million persons in India since joining the financial inclusion field in 2009.

Northern Arc Capital IPO subscription status

The initial public offer of Northern Arc Capital has been subscribed 110.91 times on the fourth day of subscription, as per BSE data.

The portion for retail investors received 31.08 times subscription while the quota for non-institutional investors got subscribed 142.41 times. The QIBs part is booked 240.79 times. The employee portion has been subscribed 7.33 times.

The initial share sale received bid for 2,38,22,43,807 shares against 2,14,78,290 shares on offer, according to BSE data.

Northern Arc Capital IPO was subscribed 20.18 times on the third day of subscription.

On the second day, Northern Arc Capital IPO subscription status was 9.99 times. On Monday, the first day of the share sale, the initial public offer of non-bank financial institution Northern Arc Capital was subscribed 2.87 times.

Northern Arc Capital IPO Review

GEPL Capital

As of March 2024, the brokerage reports that the company has established a robust network consisting of 328 Originator Partners, 50 Retail Lending Partners, and 1158 Investor Partners. The company's internal technology platform facilitates sustainable business growth at scale. The retail credit market in India is experiencing rapid expansion, particularly in rural and semi-urban areas, driven by ample opportunities in underserved markets and government efforts to enhance financial inclusion. The company is safeguarded against geographic and sector-specific risks through effective risk management, sectoral diversification, and a well-diversified funding profile.

Climate-smart financing and sustainable impact are improved by a robust ESG framework. Over the last three years, the firm has shown a 20% CAGR in net interest income while keeping a consistent asset quality and a robust ROE of 14%. It is in a good position to benefit from the predicted 13–14% CAGR increase in Indian credit by FY26.For this reason, the brokerage has suggested that the issue be rated as "Subscribe".

Canara Bank Securities Ltd

The brokerage claims that Northern Arc Capital is well-positioned for expansion in the sizable retail credit sector because to its diverse business strategy and robust technology capabilities. It should, however, carefully manage the risks associated with exposure to AIF and pressure from competitors. Long-term growth and risk mitigation will depend heavily on continued technological innovation and investment strategy diversity.

Sustaining financial stability and a competitive edge will need regular evaluation and adjustment to market conditions. As of FY2024, this issue is offered at a P/BVPS of 1.49x, which is comparable to peers. For long-term benefits, the brokerage thus advises SUBSCRIBING to this issue.

Northern Arc Capital IPO details

In addition to an offer for sale (OFS) of up to 1.05 crore shares by existing shareholdersand promoters, valued at ₹277 crore at the upper price band, the IPO also includes a new issuance of ₹500 crore. The offering is worth ₹777 crore in total.

The company plans to use the net proceeds for meeting future capital needs related to lending in the future.

The book running lead managers of the Northern Arc Capital IPO are ICICI Securities Ltd, Axis Bank Ltd, and Citigroup Global Markets India Private Ltd. The registrar of the issue is Kfin Technologies Ltd.

Northern Arc Capital IPO GMP today

Northern Arc Capital IPO GMP today is +160. This indicates Northern Arc Capital share price were trading at a premium of ₹160 in the grey market, according to investorgain.com.

Considering the upper end of the IPO price band and the current premium in the grey market, the estimated listing price of Northern Arc Capital shares was ₹423 apiece, which is 60.84% higher than the IPO price of ₹263.

'Grey market premium' indicates investors' readiness to pay more than the issue price.

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.