Northern Arc Capital Limited made a strong debut on the stock market, listing with a 33% premium over its issue price. However, the stock faced profit booking, which resulted in a 10% drop from its listing price, following investor enthusiasm. The IPO had previously attracted substantial demand during its subscription period from September 16 to September 19, 2024, where it saw an overall subscription rate of 32.05 times.

IPO Details

The Northern Arc Capital IPO comprised a ₹777 crore Book Built Issue, which included a fresh issue of ₹500 crore through 190.11 lakh shares and an Offer for Sale (OFS) of ₹277 crore, representing 105.32 lakh shares. The price band for the IPO was set between ₹249 and ₹263 per equity share. Retail investors could participate with a minimum investment of ₹14,991 for 57 shares, while HNIs required a minimum of ₹209,874 for 798 shares.

Grey Market Premium

The Grey Market Premium (GMP) for Northern Arc Capital’s shares ranged between ₹140 and ₹150, indicating a potential listing gain of 55%-57%. It is essential to remember that GMP figures are based on market speculation and should not be considered an accurate price discovery method.

Financial Performance

Northern Arc Capital has shown commendable financial growth over the years:

FY2024 Revenue: ₹19,060.33 million

FY2023 Revenue: ₹13,112.00 million

FY2022 Revenue: ₹9,165.45 million

Their EBITDA for FY2024 stood at ₹11,635.65 million, showing a consistent upward trajectory from previous fiscal years. The Profit After Tax (PAT) for the same period reached ₹3,083.34 million, showcasing the company’s solid financial base.

For its IPO, Northern Arc Capital had a pre-issue EPS of ₹22.40 and a post-issue EPS of ₹19.04, which indicates a pre-issue P/E ratio of 11.74x and a post-issue P/E ratio of 13.81x. These values are well below the industry average P/E ratio of 23.38x, suggesting that the shares were offered at a fair valuation.

Allotment and Listing

The Northern Arc Capital IPO allotment was finalized on September 20, 2024, and investors can check their allotment status by following these steps:

Visit the IPO allotment status page on the KFin Technologies website.

Select Northern Arc Capital Limited IPO from the dropdown menu.

Enter your application number, PAN, or DP Client ID.

Submit the details to view your allotment status.

Objectives of the IPO

The company plans to utilize the proceeds from the fresh issue primarily for future capital requirements toward onward lending.

Conclusion

Despite a strong listing with a 33% premium, Northern Arc Capital’s stock faced immediate profit booking, reflecting the volatility of post-listing trading. Nevertheless, the company’s robust financial performance, diversified business model, and commitment to serving the retail credit ecosystem suggest long-term investment potential. Investors should monitor market conditions closely, as the stock could present opportunities both for listing gains and sustained growth over time.

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