Target: ₹344
CMP: ₹ 257.40
Northern Arc Capital Ltd (NACL) operates a multi-channel approach that serves the retail credit market through both direct-to-customer (D2C) lending and credit solutions for Financial Institutions.
Its credit solutions focus on fulfilling the credit needs of financial institutions through lending, placement services, and fund management businesses. This structure ensures a diversified mix of interest income, fee income, and fund-management revenues, supported by a proprietary technology stack (Nimbus, nPOS, Nu Score, AltiFi) that efficiently connects retail borrowers, originator partners & investor partners.
NACL’s AUM has grown from ₹5,221 crore in FY21 to ₹13,634 Cr in FY25 and is projected to reach ₹24,710 crore by FY28, reflecting a strong 21.9 per cent CAGR. The portfolio mix continues shifting toward granular, direct-to-customer lending, with its share rising from 19 per cent in FY21 to 52 per cent in FY25 and expected to increase to 69 per cent by FY28.
Given its strong earnings growth trajectory, robust AUM outlook on a low base, GNPAs maintained at about 1 per cent and ROE recovery to around 16.5 per cent by FY28, NACL’s valuation at 0.8X P/Adj.BV indicates that the stock is grossly undervalued and offers a significant margin of safety. We initiate coverage with a Buy rating and a price target of ₹344 over the next 24 months.
Key Risks: Interest rates increasing and rise in delinquencies
Published on December 4, 2025
