Northern Arc Capital IPO Oversubscribed 2.86x on Day 1: Should You Invest? Key Insights Here
Northern Arc Capital IPO: Northern Arc Capital IPO sees 2.86x subscription on Day 1, with strong demand from retail investors. Learn more about the IPO’s price, GMP, allotment date, and expert recommendations.
Northern Arc Capital IPO: Northern Arc Capital’s ₹777 crore Initial Public Offering (IPO) has garnered significant attention, oversubscribing 2.86 times on the first day of its launch, September 16, 2024. With strong demand from retail and non-institutional investors, the IPO remains open for subscription till September 19. However, interest from Qualified Institutional Buyers (QIBs) has been relatively muted, raising the question: Should you subscribe to this IPO?
Strong Retail and Non-Institutional Demand
On its opening day, Northern Arc Capital’s IPO received bids for 6,14,36,709 equity shares, compared to the 2,14,78,290 shares offered, leading to an overall subscription rate of 2.86x. The Retail Individual Investors (RIIs) section was oversubscribed by 3.86x, while the Non-Institutional Investors (NIIs) category saw a 4.47x oversubscription. On the other hand, the portion reserved for QIBs witnessed low interest, underscoring a cautious approach from large institutional players.
Key Details of Northern Arc Capital IPO:
- Issue Size: ₹777 crore
- Price Band: ₹249 – ₹263 per share
- Lot Size: 57 Equity Shares
- Subscription Period: September 16 – September 19, 2024
- Lead Managers: ICICI Securities, Axis Capital, and Citigroup Global Markets
- Registrar: KFin Technologies
Why Should You Consider Subscribing?
Northern Arc Capital is a well-established name in India’s financial services sector, primarily focusing on providing credit to underserved households and businesses. The company has played a pivotal role in the retail credit market, facilitating financing of over ₹1.73 trillion since 2009. By March 31, 2024, the company had impacted over 101.82 million lives, creating a robust ecosystem with 328 Originator Partners, 50 Retail Lending Partners, and 1,158 Investor Partners.
The brokerage firm Anand Rathi has recommended a “SUBSCRIBE” rating for this IPO. Here’s why:
- Strong Market Presence: Northern Arc Capital has built a comprehensive financial ecosystem, supporting underserved segments with diverse retail credit solutions. Their offerings include Lending, Placements, and Fund Management, backed by cutting-edge proprietary technology.
- Growth Potential: The company aims to further expand its reach, targeting new Originator and Retail Lending Partners, which will allow it to cater to a wider audience and deepen its market presence. The company’s strategy focuses on direct-to-customer borrowers, especially in underserved areas across India.
- Attractive Valuation: The company’s Price-to-Book Value (P/BV) ratio stands at 1.4x at the upper price band, with a post-issue market cap of ₹42,428.6 million. Considering the growth potential and market position, this valuation seems reasonable.
- Strong Financial Track Record: Over the last 15 years, Northern Arc Capital has consistently contributed to India’s retail credit market, making it a trusted brand for both retail and institutional clients.
Key Financial Highlights:
- Founded: 2009
- Impact: Over 101.82 million lives
- Partners: 328 Originator Partners, 50 Retail Lending Partners
- Investor Base: 1,158 Investor Partners
Grey Market Premium (GMP) and Expected Listing Gains
As per Investor Gain, the Grey Market Premium (GMP) for Northern Arc Capital’s IPO stood at ₹178 as of September 16, 2024. With the upper price band at ₹263, the estimated listing price could reach ₹441, indicating an expected gain of around 67.68% per share. This strong GMP reflects robust demand in the unofficial market, adding to investor confidence.
IPO Timeline: Key Dates to Remember
- Subscription Period Ends: September 19, 2024
- Share Allotment Date: September 20, 2024
- Listing Date: September 24, 2024
Should You Subscribe?
For investors seeking exposure to a well-diversified financial services platform, Northern Arc Capital offers a promising opportunity. The company’s strong market position, reasonable valuation, and long-term growth prospects make it a favorable choice. Moreover, the attractive Grey Market Premium adds to the excitement, indicating potential listing gains.
However, investors should also consider the relatively low demand from QIBs, which might suggest cautiousness among larger institutional players. Nonetheless, given its established track record and expansion plans, Northern Arc Capital remains a strong contender for both short-term gains and long-term investment.
