Northern Arc Capital, a prominent non-banking financial company (NBFC), posted a stellar performance in Q4 FY25, riding high on robust disbursement growth, expanding AUM, and strong core profitability. Adding further weight to the company’s prospects, ace investor Ashish Dhawan acquired a 2.2% stake in the firm through a INR 60.9 crore block deal on 9 April 2025—a move that has sent ripples through investor circles. Let’s explore Northern Arc Q4 FY25 results in details:
Market Confidence Gets a Boost: Ashish Dhawan’s Contrarian Entry
In a market where many NBFCs are grappling with rising credit costs and interest rate headwinds, Ashish Dhawan’s move is seen as a strategic contrarian bet on Northern Arc’s long-term value. According to NSE filings, Dhawan bought 35 lakh shares at a weighted average price of INR 173.9 per share, marking a vote of confidence in a stock that’s still recovering from its 51% correction from post-IPO highs.
This stake was acquired from institutional backers including:
- 360 ONE Special Opportunities Fund – Series 2 & 3: Combined sale of 26.63 lakh shares
- Dvara Trust: Offloaded 8.35 lakh shares
These transactions collectively accounted for 2.16% of the company’s equity, now absorbed by Dhawan.
💹 Northern Arc Q4 FY25 Results: Strong Operating Metrics
Northern Arc Capital delivered a bumper set of numbers in Q4 FY25, underscoring its operational strength:
- Loan Disbursements: INR 5,593 crore (↑ 19% YoY)
- Gross Transaction Volume: INR 10,814 crore (↑ 23% YoY)
- Net Interest Income (NII): INR 320 crore (↑ 39% YoY)
- Pre-Provision Operating Profit (PPoP): INR 229 crore (↑ 66% YoY)
- Q4 PAT: INR 38 crore despite INR 194 crore in credit costs
📈 Northern Arc FY25 Results: Disbursement and AUM Surge
For the full year ended 31 March 2025, the company saw continued momentum:
- Total Disbursements: INR 19,840 crore (↑ 33% YoY)
- Lending AUM: INR 13,634 crore (↑ 16% YoY)
- Performing Credit Fund AUM: INR 3,158 crore (↑ 10% YoY)
- Gross Transaction Volume: INR 35,058 crore (↑ 20% YoY)
This growth was backed by a robust credit underwriting model that leverages a vast proprietary data pool of over 35 million loan-level records, enabling granular risk assessment across segments.
🧾 Solid Profitability, Prudent Provisions
Northern Arc posted a Consolidated PAT of INR 305 crore for FY25, with Pre-Provision Operating Profit at INR 791 crore (↑ 46% YoY). Net Interest Income for the year came in at INR 1,147 crore, backed by improved spreads and strong portfolio yield.
Despite provisioning INR 405 crore over the year—including an INR 68 crore one-time provision related to FLDG (First Loss Default Guarantee) as per revised RBI guidelines—Northern Arc’s asset quality remained enviable:
- Gross NPA: 0.93%
- Net NPA: 0.36%
- Provision Coverage Ratio (PCR): 61%
💰 Balance Sheet Strength and Capital Resilience
The company’s capital position remains strong, underlined by:
- Net Worth: INR 3,434 crore (↑ 48% YoY)
- Capital Adequacy Ratio (CRAR): 24.7%
- Debt-Equity Ratio: 2.87
- Total Assets: INR 13,638 crore (consolidated)
Additionally, INR 882 crore in equity capital was raised in FY25, including INR 449.84 crore via IPO, further reinforcing its balance sheet.
🌐 Expanding Ecosystem and Governance Framework
Northern Arc Q4 FY25 showcases a diverse lending portfolio spanning MSME, microfinance, vehicle, housing, and agri-finance segments. It partners with:
- 328 originator entities
- 1,150+ institutional investors
These relationships fuel a scalable, tech-enabled platform for credit access in underserved markets.
The company operates through multiple subsidiaries, including Northern Arc Investment Managers, Pragati Finserv, and the Northern Arc Foundation, enabling a 360-degree presence across credit, investment, and impact finance.
📊 Stock Market View: A Turnaround in Sight?
Since its September 2024 IPO, which saw an oversubscription of 110x, the company has faced a turbulent market, with its stock falling from a high of INR 350 to under INR 175. Yet, at a P/E of 13.35, it now trades significantly lower than peers like Bajaj Finance (P/E 30.93) and MAS Financial (P/E 18.55)—a valuation gap that Dhawan’s entry may help narrow.
Conclusion
Northern Arc Q4 FY25 results mark a period of strong fundamental performance, and the entry of a marquee investor like Ashish Dhawan may spark renewed interest in a stock with both upside potential and operational strength.
In a sector where investor sentiment often hinges on asset quality and scalability, Northern Arc’s consistent metrics and strategic clarity place it in a promising position for the quarters ahead.
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