Northern Arc Capital’s ₹777 crore initial public offering (IPO) Should you subscribe?
Introduction
Northern Arc Capital, a prominent non-banking financial company (NBFC) in India, has launched its much-anticipated initial public offering (IPO). This IPO has generated significant interest among investors due to the company’s strong market presence and growth potential. Let’s delve into the details of this IPO and what it means for potential investors.
IPO Details
The Northern Arc Capital IPO opened for subscription on September 16, 2024, and will close on September 19, 2024. The IPO consists of a fresh issue of equity shares worth ₹500 crore and an offer for sale (OFS) of up to 10,532,320 equity shares, aggregating to a total issue size of ₹777 crore. The price band for the shares is set between ₹249 and ₹263 per share.
Company Background
Northern Arc Capital has established itself as a leading player in the financial inclusion space in India. The company provides access to credit for low-income and underserved households and businesses through a robust ecosystem of originator partners, retail lending partners, and investor partners. With a diversified portfolio and a strong track record, Northern Arc Capital is well-positioned to capitalize on the growing demand for financial services in India.
Financial Performance
The company’s financial performance has been impressive, with a significant increase in revenue and profit after tax (PAT) over the past year. Between March 31, 2023, and March 31, 2024, Northern Arc Capital’s revenue grew by 45%, and its PAT climbed by 31%. This strong financial performance underscores the company’s ability to generate consistent returns and manage risks effectively.
Investment Considerations
- Strong Market Position: Northern Arc Capital’s extensive network and diversified portfolio make it a strong contender in the NBFC sector.
- Growth Potential: The company’s focus on financial inclusion and its ability to cater to underserved segments provide ample growth opportunities.
- Valuation: At the upper end of the price band, the company is valued at a P/E multiple of 13.4 times and a P/BV multiple of 1.5 times, which appears attractive compared to its peers.
Risks and Challenges
- Market Volatility: Like any IPO, Northern Arc Capital’s shares may experience volatility in the initial trading days.
- Regulatory Risks: Changes in regulatory policies could impact the company’s operations and profitability.
- Economic Conditions: Broader economic conditions and market sentiment will play a crucial role in the stock’s performance.
Conclusion
Northern Arc Capital’s IPO presents a compelling investment opportunity for those looking to invest in a company with a strong market position and growth potential. However, as with any investment, it is essential to conduct thorough research and consider the associated risks before making a decision.
Call to Action
Are you planning to invest in Northern Arc Capital’s IPO? Share your thoughts and investment strategies in the comments below. Let’s discuss the potential and risks associated with this new market entrant.
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