Northern Arc Capital Share Price: IPO Debut with 33% Premium, Followed by 9.4% Decline
Summary:
The Northern Arc Capital share price saw a volatile trading session after its IPO debut, initially opening at a 33% premium but later dipping by 9.4%. The IPO, which was priced between ₹249 and ₹263 per share, consisted of a fresh issue worth ₹500 crore along with an Offer for Sale (OFS) of over 1 crore shares valued at ₹277 crore.
Northern Arc Capital Share Price: A Rollercoaster Debut
The Northern Arc Capital share price kicked off trading with a solid 33% premium over its issue price. However, early excitement soon gave way to volatility. The stock opened at ₹350 on the National Stock Exchange (NSE) and ₹351 on the Bombay Stock Exchange (BSE), but saw a quick correction within hours.
By 12:25 pm, the Northern Arc Capital share price had dropped by 9.4%, lowering the company’s market capitalization to ₹5,094.75 crore.
Key Trading Stats for the Northern Arc Capital Share Price:
- 11:45 am: Shares fell by 10.2% to ₹314.2 on NSE, with a similar 10.5% decline to ₹313.9 on BSE.
- 11:00 am: The Northern Arc Capital share price stood at ₹330.1, reflecting a 5.6% drop.
- 10:31 am: The share price was trading at ₹331, marking a 5.4% decline.
- 9:58 am: The stock initially opened at ₹350, marking a 33% increase over the issue price of ₹263.
Strong Demand Leading to Oversubscription
The IPO for Northern Arc Capital saw robust demand from all investor categories, leading to an oversubscription of 110.71 times during the three-day bidding window from September 16 to 19, 2024. Below is a quick breakdown of the oversubscription:
| Investor Category | Subscription Rate |
|---|---|
| Qualified Institutional Buyers (QIBs) | 240.79x |
| Non-Institutional Investors (NIIs) | 142.28x |
| Retail Individual Investors (RIIs) | 30.74x |
| Total Subscription | 110.71x |
This level of oversubscription, particularly from institutional investors, speaks to the confidence in Northern Arc Capital’s business model and growth potential.
What is Northern Arc Capital?
Northern Arc Capital Ltd, founded in 1989, is a leading non-banking financial company (NBFC) in India. It offers a wide range of financial services, focusing on underserved segments like micro, small, and medium enterprises (MSMEs). Northern Arc’s key lending areas include:
- Microfinance
- Consumer and Vehicle Finance
- Agricultural Finance
- Affordable Housing Finance
By serving these sectors, Northern Arc plays an essential role in enhancing financial inclusion across the country.
Financial Performance of Northern Arc Capital
The financial growth of Northern Arc Capital has been impressive in recent years, contributing to the high demand for its IPO. The company reported a compound annual growth rate (CAGR) of 18% in assets under management (AUM) and a 20% increase in net profit from FY22 to FY24.
Key Financial Metrics (FY22-FY24):
| Particulars | FY22 | FY23 | FY24 |
|---|---|---|---|
| Revenue | ₹909 crore | ₹1,304 crore | ₹1,890 crore |
| Net Profit | ₹181 crore | ₹242 crore | ₹317 crore |
The proceeds from the IPO will be used to expand Northern Arc’s lending capabilities, particularly in the MSME sector, supporting the company’s long-term growth plans.
Post-Listing Volatility of Northern Arc Capital Share Price
The rapid fluctuation in the Northern Arc Capital share price on its debut day is typical for newly listed stocks. Although the share price started strong with a 33% premium, it faced a natural correction as investors took profits. By the end of the trading session, the stock had lost 9.4% of its value from its opening high.
Despite the volatility, market experts maintain a cautiously optimistic view of the Northern Arc Capital share price. Over the next few weeks, the market will be keenly observing how the stock stabilizes and performs, particularly as the company continues to grow its lending portfolio.
Future Outlook: Should You Invest in Northern Arc Capital?
For long-term investors, the current dip in the Northern Arc Capital share price could present an opportunity. The company’s strong fundamentals, proven financial growth, and focus on expanding its footprint in the MSME sector make it an attractive investment. Northern Arc’s diversified portfolio and its focus on financial inclusion put it in a strong position for future growth.
While the Northern Arc Capital share price may remain volatile in the short term, its long-term prospects are promising, especially for those willing to wait for the stock to stabilize.
Conclusion
The Northern Arc Capital share price had a dramatic debut, opening with a 33% premium before sliding by 9.4%. Despite this initial volatility, the company’s strong financial performance and growth prospects indicate that it remains a key player in India’s NBFC space. Investors looking for long-term value should consider keeping an eye on the stock as it stabilizes in the coming weeks.