Northern Arc Capital Makes a Stellar Market Debut: Stock Surges 33% Above Issue Price

Northern Arc Capital Shines on Market Debut with 33% Premium Listing

Northern Arc Capital, a Chennai-based non-banking financial company (NBFC), made an impressive entrance on the stock market on September 24, with shares listing at Rs 350 on the NSE, reflecting a 33% premium over its issue price of Rs 263. On the BSE, the stock opened at Rs 351, showcasing a similar premium of 33.5%. Although the stock experienced a minor dip during its maiden trading session, currently trading at Rs 334.55, it managed to hit an intraday high of Rs 350. The company’s market cap now stands at Rs 5,398.95 crore, with an upper circuit limit of Rs 420 and a lower circuit limit of Rs 280.

Interestingly, the listing price fell short of grey market predictions, where the shares were commanding a premium of Rs 144. For those unfamiliar, the grey market operates as an unofficial trading platform where shares are bought and sold before the IPO listing, allowing investors to speculate on future pricing. Despite this discrepancy, the IPO received a staggering response from investors, being subscribed 110.91 times on the final day of bidding.

IPO Details and Company Background

Northern Arc Capital’s IPO was offered in a fixed price band of Rs 249 to Rs 263 per share. Based on the upper price band, the company was projected to have a market capitalization of Rs 4,244 crore post-listing. The IPO included a fresh issue of shares worth Rs 500 crore and an Offer for Sale (OFS) of 1.05 crore equity shares.

The proceeds from the fresh issue will be directed towards meeting the company’s future capital requirements, particularly for onward lending.

A systemically important non-deposit-taking NBFC, Northern Arc Capital is a leading player in the financial inclusion space, focusing on providing credit access to underserved households and businesses. It partners with originators to expand its reach across sectors, geographies, and borrower segments. The company’s well-diversified business model and its decade-long presence in the sector make it a significant player among diversified NBFCs in India.

Impressive Financial Performance

Northern Arc Capital has demonstrated robust financial growth over the years. In the fiscal year ending March 31, 2024, the company saw its revenue rise by an impressive 45%, while its profit after tax (PAT) grew by 31% compared to the previous fiscal year. These figures underscore the company’s strong market position and its potential for continued growth.

A Delayed But Successful IPO

Northern Arc Capital initially filed draft papers with SEBI in July 2021 for its public issue and received regulatory approval in September 2021. However, due to market conditions or internal strategies, the company chose to delay the launch of its IPO until September 2024. This decision appears to have paid off, with the IPO receiving overwhelming demand and the stock making a strong debut.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.