Northern Arc Capital IPO opens with 60% GMP; should you park your money?

Northern Arc Capital  IPO: The initial public offering of Northern Arc Capital opens for public subscription today. With the IPO, Northern Arc Capital seeks to raise Rs 777 crore by offering a fresh issue of 19,011,407 shares and an offer for sale of 10,532,320 shares with a face value of Rs 10 each. The company has announced that it has already raised Rs 228.86 crore from anchor investors on Friday, September 13, 2024.

Northern Arc Capital IPO is available at a price band of Rs 249-263, with a lot size of 57 shares. Thus, investors can bid for a minimum of 57 shares and in multiples thereof.

 

Adding to the buzz, the unlisted shares of Northern Arc Capital are trading at a premium of Rs 158, or 60.08 per cent at the upper end of the issue price, as per sources tracking grey market activities. The said GMP reflects the favorable market sentiments for the public issue among investors.

Kfin Technologies Limited is the registrar for Northern Arc Capital IPO, while ICICI Securities, Axis Bank, and Citigroup Global Markets India are the book running lead managers of the public issue.

The three-day subscription window to bid for the Northern Arc Capital IPO closes on Thursday, September 19, 2024. The basis of allotment of Northern Arc Capital IPO shares is likely to be finalised on Friday, September 20, 2024, and subsequently, the company's shares are expected to get credited into demat accounts on Monday, September 23, 2024.

Northern Arc Capital shares are expected to make their debut on the bourses on Tuesday, September 24, 2024, by listing on the BSE and NSE.

Northern Arc Capital intends to utilise the net proceeds to meet future capital requirements toward onward lending.

Northern Arc Capital IPO review

Should you subscribe to the Northern Arc Capital IPO?

Deven Choksey Research: Subscribe

Analysts at Deven Choksey Research have recommended a subscribe rating on the Northern Arc Capital IPO. According to the analysts, at the upper end of the price band, NACL's price-to-book value multiple stands at 1.5x for the post-IPO book value of ₹174.5 per share as of March 31, 2024 (FY24), which is reasonable compared to its peers. The average price-to-book value for peers is 3.5x.

"We have a positive outlook on NACL's future as it is strategically enhancing its ecosystem through cultivating and strengthening partnerships while expanding its technology products to improve customer experience and operational efficiency. Additionally, the company is diversifying into new sectors, which presents exciting growth opportunities. Therefore, we recommend rating Northern ARC Capital IPO as Subscribe," said Deven Choksey Research.

About Northern Arc Capital

Northern Arc Capital, founded in 2009, provides retail loans to underserved Indian households and businesses. The company's diversified business model spans various sectors, products, and geographies, facilitating over ₹1.73 trillion in financing to 101.82 million people as of March 31, 2024. Northern Arc Capital has expertise in lending to micro, small, and medium enterprises (MSMEs), microfinance, consumer finance, and more. The company serves the retail lending market through a multi-channel approach, with over 14 years of experience in MSME finance.