Veteran investor Ashish Dhawan has made a significant move in the financial services space, acquiring a 2.2% stake in Northern Arc Capital through a block deal valued at INR 60.9 crore on 9 April 2025. The transaction, disclosed in exchange filings, reflects growing investor interest in the company amid a turbulent market for non-banking financial companies (NBFCs).
According to National Stock Exchange (NSE) data, Dhawan bought 35 lakh shares at a weighted average price of INR 173.9 per share. The acquisition came amid sizable offloads by institutional investors, including 360 ONE Special Opportunities Fund – Series 2 and 3, and the Dvara Trust, which cumulatively sold the equivalent stake Dhawan picked up.
Breakdown of Sellers:
- 360 ONE Series 2: Sold 5.9 lakh shares (0.36%)
- 360 ONE Series 3: Offloaded 20.73 lakh shares (1.28%)
- Dvara Trust: Sold 8.35 lakh shares (0.51%)
The total of these transactions accounted for 2.16% of the company’s equity, aligning with the stake Dhawan acquired.
Financial Backdrop: Sluggish Quarterly Results Amid Revenue Growth
The deal comes just weeks after Northern Arc reported its Q3 FY25 results, which painted a mixed picture. While the company saw an 18% YoY increase in revenue to INR 576.08 crore, net profit declined marginally to INR 75.62 crore, reflecting tightening margins and rising provisions.
- EPS dropped to INR 4.69 from INR 8.76 in the year-ago quarter.
- Provisions and contingencies surged to INR 81.47 crore, a notable increase from INR 53.42 crore in Q3 FY24.
- Interest expenses rose to INR 213.71 crore, up from INR 184.12 crore YoY.
Despite these pressures, the company’s asset quality remains pristine, boasting one of the lowest GNPA and NNPA ratios in the NBFC space at 0.45% and 0.08%, respectively, as of FY24.
Northern Arc Post-IPO Performance
Northern Arc Capital launched its IPO on 16 September 2024, with an issue size of INR 777 crore. The IPO got massive subscription of 110X and delivered an impressive 22.97% returns on listing day.
However, Northern Arc Capital post-IPO performance was very disappointing; the stock tanked ~51% from its all-time high of INR 350 per share.
The sharp correction from its post-listing highs reflects broader market skepticism around NBFC valuations and potential earnings compression due to rising interest rates and inflationary trends.
Investor Outlook: Value Buy or Cautious Bet?
Ashish Dhawan’s investment in Northern Arc may signal a long-term value opportunity. His contrarian entry comes at a time when the stock trades at nearly half its listing price and sports a modest post-issue P/E ratio of 13.35, compared to peers such as Bajaj Finance (P/E 30.93) and MAS Financial Services (P/E 18.55).
Northern Arc’s business fundamentals remain robust, supported by:
- Diversified AUM across MSME, microfinance, vehicle, housing, and agri finance.
- Data-driven underwriting, leveraging 35 million+ loan-level data points.
- A growing ecosystem of over 1,150 institutional investor partners and 328 originator partners.
The company also benefits from not having a concentrated promoter group, providing transparency and stronger governance for public shareholders.
Conclusion
Dhawan’s strategic purchase might be a calculated vote of confidence in Northern Arc’s long-term potential despite short-term market headwinds. With a solid credit underwriting framework, a strong institutional backing, and a diversified lending portfolio, Northern Arc Capital remains a significant player in India’s NBFC landscape. Investors will be watching closely to see if this bold move pays off in the quarters ahead.
For more details related to IPO GMP, SEBI IPO Approval, and Live Subscription stay tuned to IPO Central.