Northern Arc Capital profit rises 41% to 129 crore rupees in second quarter
Key Facts
Northern Arc Capital said profit after tax rose 41% year on year to 129 crore rupees in the second quarter ended September 30, 2026, compared with 92 crore rupees in the corresponding period of the previous financial year. In its results statement published in Mumbai on November 3, the company said net interest income was 425 crore rupees, up 32% year on year and 8% from the previous quarter. The results reflect an expansion in lending activity alongside an increase in core business income. The company also recorded growth in its loan portfolio and a year-on-year decline in the cost of credit. Its shares closed at 172.6 in the November 3 session, according to EL7 daily data.
The lending portfolio stood at 19,003 crore rupees on September 30, up 34% year on year and 13% from the end of the previous quarter. Direct lending to customers accounted for 12,502 crore rupees of the portfolio, or 66% of the total. The expansion puts direct lending at the center of the company’s growth, as the total assets through which it provides financing increase. In credit solutions, disbursements rose 60% year on year to 4,088 crore rupees in the second quarter, according to the chief executive. Total transaction volume in the first half of financial year 2027 also increased 38% to 22,303 crore rupees.
Asset quality and profitability indicators improved, according to figures reported by the company: the cost of credit fell to 2.55% in the second quarter from 2.66% in the corresponding period, a decline of 11 basis points. Return on assets rose to 2.82% from 2.63% a year earlier, an increase of 19 basis points. Return on equity also increased 229 basis points year on year to 12.4%. Operating profit before provisions was 286 crore rupees, up 32% year on year and 9% from the previous quarter. The indicators show improved returns alongside growth in the lending portfolio, while the operating expenses-to-assets ratio remained stable quarter on quarter at 3.6%.
For the first half of financial year 2027, profit after tax was 244 crore rupees, compared with 173 crore rupees in the same period a year earlier, an increase of 41%. Net worth rose 15% year on year to 4,213 crore rupees on September 30, while capital adequacy was 20.8%. The company said fee and other income grew 31% year on year to 28 crore rupees in the second quarter, while assets under its private credit fund stood at 2,785 crore rupees. The company also made initial closes of investments worth 400 crore rupees for a new diversified debt fund targeting a size of 2,000 crore rupees. These activities aim to expand fee-based revenue sources alongside its lending business.
Chief Executive Ashish Mehrotra said the company is focused on growing fee-based revenue streams, and that priorities for the second half include continuing growth across business segments. He added that the company would remain cautious in lending in drought-affected areas, describing its stance toward those areas as "cautiously optimistic." The company’s network comprises 446 branches and 28 active digital partnerships supporting direct lending to customers in the small and medium-sized enterprise, consumer and rural segments. The investor results call was held on November 3, and the company published a link to its recording on its website on November 4. Management’s approach to drought-affected areas and its fee-based businesses are central to its plan for the remainder of the financial year.