Northern Arc Capital Ltd

Price story Before the numbers, the tape. A stock price moves through four repeating seasons: a flat base (stage 1), an advance (2), a top (3), a decline (4). Where the price sits in that cycle frames everything below.

Northern Arc Capital Ltd trades at ₹305, in a confirmed uptrend and 16 weeks into that stage. That is +10.6% against its own 200-day average. It sits at 82% of a 52-week range of ₹212 to ₹325. On relative strength it has been ahead of the NIFTY 500 on a trailing-13-week view for 2 straight weeks.

Today the stock is in a confirmed uptrend — week 16 of stage 2, confirmed. At ₹305 it trades +10.6% versus its 200-day average and sits at 82% of its 52-week range (₹212–₹325).

Against the market, two honest reads. Cumulative: over the last 2.0 years the stock moved −1% while the NIFTY 500 moved −6% — ahead of the index over the full window. Recent form: on a trailing-13-week view the stock has been ahead for 2 straight weeks — the ribbon below is that same metric, week by week.

What would end the trend, mechanically: two Friday closes in a row below the 200-day line. That is the exit rule — no debates.

Story check

Northern Arc Capital Ltd's story is not scored yet against the markers our research file set on 17 August 2026. Where it sits in its own cycle: Early expansion with defensive provisioning after a deep credit-loss cycle. Marker count: 20 not due yet. Our fortnightly research layers last read it on 22 August 2026.

From the numbers. Profit recovered from the March 2025 trough of 38 crore to 114 crore in FY27-Q1, but credit cost is still 110 crore that quarter (96 percent of profit) and the guide holds 2.6–2.7 percent.

From the price. Fell 4.9 percent on results day; 281 rupees on 16 August 2026 is 1.17 times March book and 1.12 times June book on a 22-month listed series.

From the research. Three guidance cuts, two 2026 regulator penalties, unanswered 5 percent first-loss on 19 consumer partners, overlay of about 66 crore held after default-loss-guarantee relief.

🚨 Where they disagree. The operating print is repairing. The price already assumes a return on equity the book has not earned (about 11 percent delivered versus about 14 percent implied by 1.17 times book). Gross bad loans of 1.0 percent in June 2026 sit beside 90-day write-offs and FY26 auditor write-offs of 694.16 crore. Layer 1 DROP, Layer 2 BENCH and CIO WATCH are the matching call; DEPLOY is not.

What is proven. Lending assets under management 16,855 crore (+26 percent), direct-to-customer 64 percent, pre-provision profit covering the profit-and-loss credit-cost charge in all eight fully measured quarters, capital adequacy 22.71 percent. FY26 auditor-noted gross loans written off 694.16 crore against profit after tax 406 crore (171 percent of profit); profit-and-loss impairment 412 crore. The 301 crore figure is FY25 profit, discarded as a write-off.

What is not proven yet. Credit cost below the live 2.6–2.7 percent guide without 90-day write-offs, stressed-loan sales and partner first-loss; seasoning of 430 branches and the 51 percent direct-to-customer burst; look-through unsecured 14–16 percent versus direct rural 7 percent; Nimbus first-loss stock in rupees; unlocked private-equity supply.

🚨 What would change our mind. A pullback so 1.17 times book no longer prices a mid-teens return on equity, plus two results that disclose write-offs in rupees and print credit cost below 2.3 percent of average total assets, with private-equity blocks not selling into that print. Gross bad-loan ratio above 2 percent is a crash test, not this WATCH test.

Layer 1 read, 22 August 2026 — KEEP. A real, earnings-led recovery from the microfinance credit shock — but management has missed four guides and still will not disclose write-offs in rupees. Quarterly profit fell to ₹38 crore in March 2025 when the microfinance credit cycle broke, and has climbed back to ₹133 crore and then ₹114 crore as bad-debt charges fell to 2.6% of assets and the lender shifted to lending directly to customers rather than through partners — that book is now ₹10,000 crore, 64% of the total. Two things stop this being a high-conviction call. Management has revised four separate promises the wrong way, including softening its FY27 return-on-assets target from 3.2% to 'closer to 3%'; and the fund's own deep dive of 17 August found the auditor recorded ₹694 crore of loans written off in FY26 against ₹406 crore of profit, which t…

What would change Layer 1’s mind. Sharpened from the timeline's line and driver D2's kill-switch, and deliberately aligned with the standing record's own test: two consecutive prints with credit cost at or below 2.3% of average total assets WITH the rupee write-off figure and Stage-3 provision cover finally disclosed (markers M18-M20), at a book multiple no higher than today's 1.2x, would flip this to P1. The reverse also holds — a single quarter in which consumer or micro-enterprise credit cost re-accelerates, or a fifth…

Layer 2 read, 22 August 2026 — ADVANCE. Microfinance is healing while industry supply is being withdrawn, so Northern Arc earns L3 review. Northern Arc's direct-to-customer assets are now the majority of its book, and credit cost has moderated, although 90-day write-offs make the 1.0% bad-loan ratio conditional. Externally, the sector's raw profit series has turned positive and the capital block is IDEAL_TROUGH_SETUP, so this L2 call advances despite the standing record's WATCH and unresolved M17-M20 tests; it does not approve deployment.

What would change Layer 2’s mind. Two consecutive results with credit cost at or above 2.6% while D2C asset quality worsens, or another result without rupee write-offs and provision cover, would flip ADVANCE back to BENCH or DROP after L3 verification.

Layer 3 read, 22 August 2026 — BENCH. Bench: the recovery is visible, but write-offs and young direct loans still hide the true loss rate. The July call reports credit cost of 2.6% and gross bad loans of 1.0%, but it also says unsecured loans are written off after 90 days; that accounting can make the ratio look cleaner after losses have left the book. The standing research record's M18-M20 tests still lack rupee write-offs, stressed-loan stock, and provision cover, while four of five guidance pairs are misses. This agrees with the record's WATCH and keeps the P2 on BENCH.

What would change Layer 3’s mind. Two consecutive results with credit cost at or below 2.3%, disclosed rupee write-offs and Stage-3 provision cover, and no fifth guidance walk-back would satisfy research markers M17-M20 and flip BENCH toward DEPLOY.

The test written in advance. Credit cost delivers toward the original FY27 path, not the cut guide — credit cost as a percent of quarterly average total assets at or below 2.3 percent for two consecutive prints, with the live guide not raised by FY27-Q3 results, expected around 31 January 2027.

The test written in advance. Write-off rupees disclosed and falling — quarterly loans written off in rupees, and FY27 auditor-noted gross write-offs.

The test written in advance. Gross bad-loan stock in rupees, not only the ratio — Stage-3 / gross bad-loan stock in crore, beside write-offs of the same period Stage-3 stock in rupees not rising while the 1.0 percent ratio is celebrated; write-offs named in the same sentence by FY27-Q2 results, expected around 31 October 2026.

How the money is made. Profit is (loan yield minus borrowing cost) times earning assets, plus fees, minus operating costs, minus credit cost (provisions plus write-offs minus recoveries), minus tax.

Did the business cover its own costs? Operating profit covered credit cost and gross write-offs against pre-provision operating profit in 8 of 8 periods; cumulatively . The P&L charge is covered. The write-off machine is not a covered story. Guide 2.6 to 2.7 percent means coverage does not improve by management intention.

🚨 Gross bad-loan ratio versus write-off rupees. Gross bad loans printed 1.0 percent on 30 June 2026 and 1.2 percent at FY26 close. In the same breath: unsecured written off at 90 days, FY26 auditor write-offs 694.16 crore (3.58 times remaining Stage-3 of 194 crore, 171 percent of profit 406), Q1 stressed-loan sale 38.23 crore, consumer 0.2 percent gross bad loans with 5.0 percent credit cost, small-business Gross Stage-3 5.47 percent in June 2025, Stage-3 cover 48.5 percent. The ratio and the rupees tell opposite stories. Equifax itself flags write-offs as the microfinance improvement channel.

🚨 Q1 profit print versus results-day price. Headline profit +41 percent year-on-year (114 versus 81 excluding non-controlling interest). The stock closed 285.35 rupees on 28 July 2026, down 4.9 percent. Sequential profit −14 percent, fee −20 percent, overlay kept, intermediate book −713 crore, credit-cost guide held at 2.6 to 2.7 percent. The market sold the sequential honesty. The old stored dive treated the print as a DEPLOY. This research treats the selloff as the more honest read.

🚨 Optical domestic-institution exit versus frozen private-equity blocks. Domestic-institution share 23.36 percent (September 2024) to 5.63 percent (June 2026) looks like a dump. The cliff is March to June 2025, the quarter after lock-in expired. LeapFrog 16.15 percent and Augusta 16.02 percent share counts are frozen; they were recast from domestic-institution-others into public foreign companies. The real sell is mutual funds 1.49 to 0.19 and insurance 2.70 to 1.61. Supply risk is the unlocked 49 percent that has not sold yet, not a 17-point domestic dump that already happened.

🚨 Pipeline DROP / BENCH / WATCH versus stored DEPLOY 78. Layer 1 DROP on 19 July 2026, Layer 2 BENCH on 27 June 2026, CIO WATCH on 31 May 2026. Layer 3 DEPLOY on 31 May 2026. The old stored dive said DEPLOY at conviction 78, called 1.17 times book compressed, scored gross bad loans below 1 percent as met at FY26 1.2 percent, and used 301 crore as FY26 write-offs (that was FY25 profit). This dive's verdict is WATCH, conviction 54. It agrees with Layer 1, Layer 2 and the CIO. It disagrees with Layer 3 DEPLOY and with the old stored row. The Q1 print did not retire those layer reasons.

What this research does not know. Quarterly write-off rupees for all 13 quarters except the FY27-Q1 stressed-loan sale of 38.23 crore gross. Old-dive Q1 write-off 74 crore is unmapped in Q1 notes and is not used.; Annual Report 2025-26 Notes 7 and 36 not extracted — the page does not list that report as of 17 August 2026. Auditor write-offs 694.16 versus profit-and-loss 411.88 remains unreconciled (attempted remainder about 8 crore, mixed…; Assigned versus on-book versus partnership write-off split unknown. Consolidated versus standalone write-off perimeter mixed.; Look-through unsecured of assets under management has no official table. Direct rural 7.14 percent plus 18 to 22 percent of 6,089 crore intermediate = 13.6 to 15.1 percent is arithmetic, not a filing line.; Nimbus first-loss / cash collateral outstanding in rupees, as a percent of net worth 4,056 crore, and by special-purpose vehicle — unsized.; First-loss percent on each of 19 live consumer partners — asked 27 July 2026, unanswered. Co-lending note says up to 5 percent.

Sources: Official Q1 FY27 earnings-call transcript (IR PDF, 14 pages / 7,197 words — not the truncated stub) (27 July 2026); Hindu Business Line — Q1 FY27 print and 4.9 percent results-day move (28 July 2026); CNBC TV18 — Q1 FY27 (standalone profit 121.8 crore, provisions 110.5 crore) (27 July 2026); ScanX — Q1 FY27 notes: overlay 65.84 crore and ARC transfer 38.23 crore (28 July 2026); Standalone FY26 results PDF (Walker Chandiok, year ended 31 March 2026) — KAM write-offs cited via annual-report digest (31 March 2026); ICRA rationale PDF — AA- Stable, first-loss at 90-plus days, gearing about 3.0 times (29 December 2025); CARE rationale — MSME Gross Stage-3 5.47 percent as of June 2025 (6 October 2025); Trendlyne shareholding — June 2026 pattern, lock-in 0, LeapFrog 16.15 percent, Augusta 16.02 percent (17 August 2026); +8 more. The story check is re-scored every results season; the record below never changes.

Revenue For a bank, revenue is everything the franchise earns — interest on the loan book plus fee and other income.

Northern Arc Capital Ltd reported ₹780 Cr of income in the Jun 26 quarter, +28.9% year on year. That is the 9th straight quarter of year-on-year growth. Over 9 years it has compounded at 24.7% a year. The last full year, FY26, came in at ₹2,691 Cr. The last four reported quarters add to ₹2,870 Cr.

FY26 revenue came in at ₹2,691 Cr (+14.8% on the year), capping 9 years at 24.7% compound. The latest quarter (Jun 26) printed ₹780 Cr, +28.9% year on year — the 9th consecutive quarter of year-over-year growth.

Pace check: the last four quarters averaged +21.1% growth against the decade's 24.7% — the current year is running slower than its own long-run rate.

Acceleration check: trailing-twelve-month revenue grew +21.1% over the last 4 quarters against +17.7%/yr over the last 8 — accelerating; TTM profit +54.4% vs +13.6%/yr — accelerating.

Book compounding interrupted only in FY25-Q3 freeze and FY26-Q1 dip · FY24-Q1 → FY27-Q1. Pre-cycle expansion; credit-cost rupees not in the decks used; database profit 91. Book still compounding; credit-cost rupees not in the decks used.

Why-sources: our stock research file (17 August 2026) and the company’s own results for those quarters.

Net margin Net margin — what the bank keeps of every ₹100 of revenue after every cost, provision and tax. It is the cleanest single margin we can read for a lender.

Northern Arc Capital Ltd's net margin is 14.6% in the Jun 26 quarter, +1.7 percentage points against the same quarter a year ago. Across 9 fiscal years the net margin has ranged 11.3% to 20.0%. The current quarter sits inside that band.

Why this happened. Net interest income 394 crore (+32 percent year-on-year). Net interest margin 9.3 percent in the quarter against a 9.5 percent next-quarter promise and a 10 percent year-end promise. Book cost of funds 8.46 percent; incremental 8.69 percent. That gap caps the spread. Opex 3.6 percent of assets in FY26. Credit cost 2.6 percent of average total assets (2.76 percent of earning assets) is the line that governs residual return on assets 2.7 percent versus a 3 percent target.

The latest quarter's net margin is 14.6%, +1.7 pp against the same quarter a year ago. Across 9 fiscal years the net margin has ranged 11.3%–20.0%.

Why: the numbers show the net margin move clearly, but the cost lines behind it sit below what we hold — so we state the move without inventing its driver.

Net profit Net profit is what survives every cost, interest and tax — the number EPS, dividends and book value all grow from.

Northern Arc Capital Ltd earned ₹114 Cr of net profit in the Jun 26 quarter, +46.2% year on year. It is the 3rd consecutive quarter of growth. Full-year FY26 profit was ₹404 Cr. The 9-year compound rate is 22.7%. That is 14.6% of the quarter's revenue. The same quarter a year earlier earned ₹78.0 Cr.

Why this happened. FY27-Q1 profit 114 crore versus 78 a year earlier (+46 percent including non-controlling interest; headline +41 percent uses 81). Sequential 133 to 114 is −14 percent, and the whole profit-before-tax drop of 23 crore is the credit-cost add of 23 crore. FY26 profit 406 crore sits beside auditor write-offs 694.16 crore (171 percent of profit) and impairment 412 crore. Q1 credit cost 110 is 96 percent of Q1 profit.

Jun 26 profit was ₹114 Cr, +46.2% year on year — the 3rd consecutive quarter of growth. On the full year, FY26 printed ₹404 Cr (+34.2%), and the 9-year compound rate is 22.7%.

Why profit moved: revenue contributed +28.9% and the margin +1.7 pp — the quarter was revenue-led, with the margin roughly flat.

Pace comparison, last four quarters: profit +82.7% vs revenue +21.1%. Profit is growing faster than sales — fixed costs are being spread over a bigger base, and each extra rupee of revenue drops more to the bottom line.

Pre-cycle expansion, still-low credit cost · FY24-Q1 → FY24-Q4. Pre-cycle expansion; credit-cost rupees not in the decks used; database profit 91. Book still compounding; credit-cost rupees not in the decks used.

🚨 Credit-cost cycle into the March 2025 trough (profit 38) · FY25-Q1 → FY25-Q4. First listed call. Credit cost 51 (1.7 percent of average assets, 60 bps model change). Gross bad loans 0.47 percent, before the 90-day write-off flood. Direct-to-customer 52 percent. Promise: no additional stress on own book. Credit cost 78; first-half 130 = 2.1 percent of assets. Stage-1 cover 0.65 percent to 1.01 percent. Direct microfinance 11 percent. Branches paused at 370. AUM guide 25–27 percent — later cut.

Repair with a moving guide; FY26 gross bad loans 1.2 percent · FY26-Q1 → FY26-Q4. AUM −2 percent sequential. Credit cost 102 (3.0 percent) includes residual default-loss-guarantee 19. Gross bad loans 1.13 percent beside write-off policy. Three-year return-on-assets 3.7–4 percent sold; later walked back. Credit cost 92 (2.7 percent). First of the FY26 guide cuts: AUM 20–25 to 18–22 percent; next-year credit cost 2.3–2.5 percent (later abandoned). Rural credit cost 7.7 to 5.1 percent.

Why-sources: our stock research file (17 August 2026) and the company’s own results for those quarters.

Asset quality — the ladder Gross NPA is the slice of the loan book where repayments have stopped. Net NPA is what remains after the money already set aside against those loans. Falling is healing; rising is damage arriving.

Loan-book quality history is not available for Northern Arc Capital Ltd, so this section names the gap rather than estimating a ratio. No gross or net non-performing-asset series is filed in a form this page can read, and none is inferred from the profit line. The income, margin and return sections above carry the evidence this business does report.

🚨 Why this happened. FY26 operating cash outflow 1,541 crore is loan-book growth (loans increased 3,521 crore in the working-capital line), not an industrial cash-quality fail. The lender substitute is credit cost plus write-offs plus funding: FY26 pre-provision 956 versus credit cost 412 (43 percent eaten) versus auditor write-offs 694 (73 percent eaten). First-loss unsized. Negative operating cash on a growing lender is shown and then ignored as a fail.

🚨 Why this happened. Gross bad loans 1.0 percent in June 2026 and 1.2 percent at FY26 close, both beside the 90-day unsecured write-off and beside FY26 auditor write-offs 694.16 crore (3.58 times remaining Stage-3 of 194 crore). Q1 ARC 38.23 crore gross. Stage-3 cover 48.5 percent on a 64 percent direct-to-customer book. Consumer 0.2 percent gross bad loans with 5.0 percent credit cost. Small-business Gross Stage-3 5.47 percent in June 2025. Overlay about 66 crore held. Write-offs in the same breath as the ratio, from the notes, not the call.

We do not hold quarterly loan-book quality numbers for this bank, so this section states that plainly rather than working around it.

Why: loan-book quality is the engine room of a bank, and its drivers — slippages, recoveries, provisioning — sit below what we hold for this name; the sections around it carry the reads we can stand behind.

The loan book We read the loan book through revenue — when the book grows, revenue grows with it. It is a rough proxy, and we say so: rate moves and fee swings can shift it a few points in any one year.

Northern Arc Capital Ltd's revenue grew +14.8% in FY26 to ₹2,691 Cr, so the book is growing. The latest quarter ran +28.9% year on year. The net margin on that income is 14.6%, +1.7 percentage points against a year ago. Interest income is a proxy for the book; rate moves can shift it a few points in any one year.

Why this happened. Lending assets under management 16,855 crore (+26 percent year-on-year, +1.6 percent sequential). Direct-to-customer 10,766 crore, 64 percent, +51 percent. Intermediate book shrank 713 crore sequential to 6,089. Direct rural 1,203 crore is 7.14 percent; look-through unsecured adding 18 to 22 percent of the intermediate book is 13.6 to 15.1 percent. Co-lending 2,119 crore is on someone else's sheet with 10 percent retention. On-book 13,555. Branch count 430, rural about 3.5 crore of assets per branch.

FY26 revenue was ₹2,691 Cr, +14.8% on the year, and the latest quarter ran +28.9% year on year. The net margin on that revenue is 14.6% this quarter (+1.7 pp YoY) — growth with a widening margin on it.

The synthesis: a lender compounds when the book grows while the margin holds and the loan book stays clean — gross NPA is the loan-quality read we carry here.

Returns on equity and assets Two numbers rate a bank: ROE — what it earns on shareholder money — and ROA — what it earns on everything it deploys. ROE above ~13–15% earns its keep; below that, growth builds book slowly.

Northern Arc Capital Ltd earns a return on equity of 11% in FY26. Its trough over the ladder below was 5% in FY21. For a lender the balance sheet is the operating asset, so equity return and asset return have to be read together.

🚨 Why this happened. FY26 return on equity 11.1 percent, Q1 about 11.5, return on assets 2.7 to 2.8 percent. Gearing 3.07 times pins it. Target 15 to 17 percent in 8 to 10 quarters is unearned while credit cost holds 2.6 to 2.7 percent. Capital adequacy 22.71 percent is solvency, not earning power. Price-to-book 1.17 on 11.1 percent return is 10.5 years of that return to earn the book premium. Return on purchase price 9.5 percent.

FY26 ROE came in at 11%, recovered from a FY21 trough of 5%. Return on assets is withheld on this page — its two source series disagree for this quarter. That return is below the bar a bank must clear to compound book value quickly — which is also the honest reason the stock trades where it does.

Why ROE moved: profit compounded 22.7% a year over 9 years while the equity base grew more slowly — earnings recovering faster than book value builds is what lifts ROE off a trough.

The quarterly return-on-equity and return-on-assets curves, which only the second data source carries, are not drawn on this page: its two data sources disagree by up to 20% on reported income across 12 comparable periods. A figure two sources cannot agree on is not drawn — the gap is a decision, not missing data.

Debt

For a bank, borrowings are raw material, not a warning sign — solvency is read through the returns and the loan book. A manufacturer’s debt is a claim against its profits, so the debt-to-equity lens that works everywhere else misleads on a lender and is not applied here.

Why this happened. Borrowings 12,440 crore in June 2026 against equity 4,056, gearing 3.07 times. Capital adequacy 22.71 percent. Rating AA- stable / A1+ reaffirmed. Incremental cost of funds 8.69 percent versus book 8.46. Annual-general-meeting 18 August 2026 seeks borrowing limit 15,000 to 17,000 crore and 5,000 crore of private-placement notes. Funding access holds. First-loss on the partner book is the un-sized liability-side plug: 29 percent of assets under management is partner-originated retail with first-loss invoked at 90-plus days, per the December 2025 rating rationale.

A manufacturer’s debt is a claim against its profits; a bank’s borrowings are its inventory — money taken in to be lent out. The debt lens that works everywhere else misleads here, so this page does not apply it. The solvency questions for a bank — is the loan book sound, is the equity earning — are read through the loan-book and returns sections above.

Ownership Who owns the stock, quarter by quarter: promoters (the controlling owners), foreign and domestic institutions, and the public. Steady accumulation by people close to the numbers is a signal; a quiet register is also an answer.

Domestic institutions cut 17.7 points of Northern Arc Capital Ltd over 7 quarters, the biggest move on the register. That takes domestic institutions to 5.6% of the company. Foreign institutions moved +4.0 points over the same window, to 8.6%. The register is read on the four disclosed classes only; nothing is inferred between filings.

🚨 Why this happened. No promoter. Pledge zero. Lock-in already zero since about March 2025. LeapFrog still holds 16.15 percent and Augusta 16.02 percent with lock-in already at zero since about March 2025. Eight Roads 6.87, IFC 6.07, Accion 3.98 — foreign companies about 49 percent, unlocked. Optical domestic-institution drop 23.36 to 5.63 percent is mostly a recast after lock-in expiry; LeapFrog and Augusta share counts are frozen. Real sell: mutual funds 1.49 percent (June 2025) to 0.19 percent (June 2026); insurance 2.70 to 1.61. Shareholder count 124,981 to 90,306. Supply risk is live, not a 2025 event.

The register over the last two years — Domestic institutions: −17.7 points over 7 quarters to 5.6%; Foreign institutions: +4.0 points over 7 quarters to 8.6%.

Why the register moved: rotation — foreign institutions +4.0 points against domestic institutions −17.7 points over 7 quarters — one class of institutions handing the register to the other, not a verdict change by the people closest to the numbers.

Safety line The Z-score estimates how far a company sits from balance-sheet distress — above roughly 3 is safe, below roughly 1.8 is the danger zone. It was built for manufacturers, so it is not applied to banks and lenders.

Northern Arc Capital Ltd: the Z-score is omitted — it was built for manufacturers, not banks, and applying it here would be theatre. The Z-score was built for manufacturers and is not applied to banks and lenders, so solvency here is read from the capital and asset-quality lines instead.

🚨 Why this happened. Two Reserve Bank penalties in 2026: 2.70 lakh on 29–30 January (no suspicious-transaction software) and 6.20 lakh on 14 August (wrong FY25 complaint disclosure plus Internal Ombudsman bypass). FY26 complaints 29,768 received / 156 pending — and the August order says FY25 complaint disclosure was wrong, so the complaint print cannot be taken at face value until restated. Subsidiary employee misappropriation 2.09 crore. Employee turnover 51.80 percent. Amounts on the penalties are small. Pattern on a 64 percent direct-to-customer book is franchise risk.

The safety line in one sentence: the Z-score is omitted — it was built for manufacturers, not banks, and applying it here would be theatre.

Valuation For a bank we price the book, not the earnings: P/BV is what the market pays for each ₹1 of the bank's net worth. A bank below 1× book is priced below the value of what it owns, net of what it owes.

Northern Arc Capital Ltd trades at 1.3× P/BV, at the pricey end of its own range (84th percentile). Its long-run median P/BV is 1.1×, measured across 1.9 years of weekly readings. This places the multiple against the stock’s own record, and says nothing about what the business is worth.

🚨 Why this happened. Price 281 rupees on 16 August 2026. Price-to-book 1.17 on March book 241 and 1.12 on June book. Listed September 2024 — about 22 months of history, not a ten-year cycle. A 1.35 snapshot for the week of 9 August carries low-reliability and zero cycle count. Ordinary earnings-multiple 10.4 is the wrong lens. Price-to-book divided by return on equity is 10.5. The multiple assumes about 14 percent return on equity; the book delivered 11.1. Sensitivity must shock leverage and credit cost, not only return on equity.

Today's P/BV of 1.3× is at the pricey end of its own range (84th percentile), against a long-run median of 1.1× measured over 1.9 years of weekly readings. This is a comparison against the stock's own history — not a claim about what it is worth.

The honest context for that discount: a bank earning about 11% on its equity is worth less per rupee of book, and the market has priced that in rather than overlooked it. The discount closes only if the returns themselves improve.

Why the multiple sits where it does: over the past year book value grew while the price moved +23.8% — the price ran ahead of the book, pushing the multiple up its own range.

Put together: the multiple is full against its own past, so the story rests on the book-value line underneath it, not the multiple.

The PEG ratio and its quarterly curve, which only the second data source carries, are not drawn on this page: its two data sources disagree by up to 20% on reported income across 12 comparable periods. A figure two sources cannot agree on is not drawn — the gap is a decision, not missing data.

What the price assumes This reading works the multiple backwards. It asks one question: what yearly rate of profit growth is a buyer at the market price already paying for? The number is the growth rate that makes eleven years of profit — six years growing, then five fading — add up to that day's market price, once each year is discounted at 11% a year.

Solved at its 24 August 2026 price, Northern Arc Capital Ltd was paying for profit growth of about 3.5% a year. Profit itself has compounded 22.7% a year over the past 9 years. Today the market pays 1.3× P/BV, the 84th percentile of its own 2-year range.

What the two numbers say together. The multiple is full against its own past, and the growth the price is paying for is below what this company has actually delivered.

How to hold this number: it is a reading of one day's price, taken on 24 August 2026, not a running figure — every other number on this page, the multiple included, is read off the live quote as of 11 September 2026. A higher price is paying for more growth and a lower price for less, so it moves whenever the price does, and this page does not restate it between measurements.

Stage: Turning around Every business sits somewhere on a fundamental arc, and this page names the spot before anything else. The last twelve quarters of revenue, profit and EPS growth — plus the return the business earns on its capital — are read as curves: Deteriorating (the curves are falling), Turning around (a trough has just formed and the last few quarters lift off it), Improving (the climb off the trough is sustained), Consistent (steadily positive with healthy returns), Topping out (still high but decelerating from the peak). When the curves genuinely disagree the read is Mixed; too little history is No read. CAGR (compound annual growth rate) is the smooth yearly pace that turns the starting value into the latest one — the fairest way to compare growth across different time spans. Read the columns together: if the 1-year number towers over the 10-year, recent growth is running hotter than the long-run trend. A dash means that window is not held, or the base year was a loss (where a growth rate is not meaningful).

Northern Arc Capital Ltd reads as turning around on its fundamental arc. Turning around — profit growth swung from −17.0% at the trough to +46.2% off a 4-quarter-old trough (single-quarter readings), ROE holding at 11.0%. The read is built from 9 quarters across 3 curves, on partial evidence.

Why it matters: growth inflections are where re-ratings start — the curves say a turn is forming, so the question becomes whether the next quarters confirm it.

One or more growth curves carry a base-effect spike — a large year-on-year move off a near-zero or loss-making comparable quarter. Those spikes are capped before the classifier reads the trajectory, and shown pinned on the chart, so a single distorted quarter does not drive the stage call.

Return readings here are annual, not quarterly — read as level and direction only; they can confirm the growth curves but never drive the stage on their own.

A partial read: at least one curve is short, or the returns curve is not the computed quarterly series — hold the stage word a little more loosely.

4-Factor Sector Score

65.5/100 — rank 3 of 7 in Finance & Investments - Microfinance · 64% evidence confidence

Northern Arc Capital Ltd scores 65.5 out of 100 against the 7 companies it is compared with in Finance & Investments - Microfinance, ranking 3. Balanced evidence: keep at normal research priority and require another comparable period before raising conviction.

The four contributions add to the total exactly: 25.2 + 14.7 + 13.5 + 12.1 = 65.5. This is the SAME number shown on the sector comparison — it is computed once, for the whole peer set, and read here.

What would change it: The read weakens if ROA rolls over or gross NPA rises while sector-relative strength deteriorates.

Quarterly scorecard

20 markers came out of our Northern Arc Capital Ltd research file of 17 August 2026, and each results season scores every one of them. No results season has been scored against them yet. A row is permanent: a miss stays on the record after it is fixed.

Said versus delivered

What Northern Arc Capital Ltd's management promised, set against what actually arrived — 6 tracked promises on the record. Scored in our research file, promise by promise. A promise that slipped stays on this page after it is met.

🚨 Said 2024-10-01, due FY25 close — missed. Promised: Fee and other income back to FY24's 1 percent of average total assets. What arrived: FY25 fee 0.8 percent; Q4 FY25 0.9 percent; FY26 0.7 percent; FY27-Q1 0.5 percent.

🚨 Said 2024-10-01, due FY25 — missed. Promised: Credit cost consistent; 1.7 percent includes 60 bps model, underlying about 1.1 percent; no additional stress on own book. What arrived: FY25 credit cost 3.2 percent (405 crore); Q4 194 crore.

🚨 Said 2024-10-01, due next few quarters — missed. Promised: Growth similar to 30 percent-plus three-year compounding. What arrived: FY25 assets under management +16 percent.

🚨 Said 2024-10-28, due 31 Mar 2025 — missed. Promised: Assets under management 25 to 27 percent by end-FY25. What arrived: +16 percent to 13,634 crore. Cut to 15 to 20 percent on 14 Feb 2025 — guidance cut 1.

🚨 Said 2024-10-28, due FY25 — missed. Promised: Hold credit cost at first-half run-rate about 2.1 percent; no change in guidance. What arrived: 3.2 percent / 2.6 percent excluding the default-loss-guarantee item.

Said 2024-10-28, due near term / FY25 — not due yet. Promised: Branch expansion on hold until the credit environment eases. What arrived: Held through FY25 (370 to 360). Restarted FY26 (+72). Delivered as a pause; restart is a new promise.

Every quote above is taken word for word from the company’s own earnings calls.

Governance

What we checked on how Northern Arc Capital Ltd is run. 6 items came back clean and 8 are being watched. Read from the company’s own filings and earnings calls; a watch item is a question, not a finding.

Clean (6). FY26 standalone audit unmodified by Walker Chandiok (year ended 31 March 2026); opinion not modified on the default-loss-guarantee emphasis-of-matter. Auditor fee 1.628 crore.; FY27-Q1 limited review also Walker Chandiok, board 27 July 2026.; No promoter; pledge 0.0 percent every quarter since listing. Chair (P.S. Jayakumar) is not the chief executive (Ashish Mehrotra).; Locked-in shares 0.0 percent as of June 2026 — lock-in expired about 20 March 2025. This is a fact, not a quality stamp; supply sits on watch.; Whistle-blower complaints 0 in FY26. Directors: non-disqualification certificate, FY26.; Capital adequacy 22.71 percent at 30 June 2026; rating AA- stable / A1+ reaffirmed (rationale 29 December 2025). Joint-auditor add is threshold-driven (assets above 15,000 crore), not a qualified opinion.

🚨 On watch (8). Private-equity / development-finance overhang about 49 percent unlocked: LeapFrog 16.15 percent (26,108,216 shares, count frozen), Augusta / Affirma 16.02 percent (25,887,110, unlocked from March 2025), Eight Roads 6.87 percent, IFC 6.07…; Chief executive FY26 pay 10.66 crore versus median employee 5,58,280 = 191 times. Annual-general-meeting 18 August 2026 seeks fixed 6.05 crore, variable 3.52 crore, plus special discretionary 2.10 crore. Chair commission 2.03 crore for…; Director-interested loans FY26: Easy Home 6.36 crore (chief executive interest); Neogrowth 21.88 crore (nominee director). Small versus assets under management; they are related-party credit.; First-loss unsized: 29 percent of assets under management is partner-originated retail with first-loss invoked at 90-plus days (December 2025 rating rationale). 5 percent on all 19 consumer partners asked 27 July 2026, unanswered. Nimbus…; 90-day write-off plus auditor write-offs 694.16 crore plus Q1 stressed-loan sale 38.23 crore versus gross bad loans 1.0 percent in June 2026 and 1.2 percent at FY26 close. Stage-3 cover 48.5 percent on a 64 percent direct-to-customer book.; Two Reserve Bank penalties in 2026: 2.70 lakh (29–30 January, no suspicious-transaction software) and 6.20 lakh (14 August, wrong FY25 complaint disclosure plus Internal Ombudsman bypass). Repeat supervisory hits.; Subsidiary employee misappropriation 2.09 crore (annual-report note). Employee turnover 51.80 percent FY26. Customer complaints FY26: 29,768 received, 156 pending — and the August order says FY25 complaint disclosure was wrong.; Three guidance cuts (FY25 assets-under-management 25–27 to 15–20; FY26 20–25 to 18–22; FY27 credit cost 2.3–2.5 abandoned). Founder/vice-chair tenure ended 31 March 2026. Write-off policy versus ratio cosmetics is a disclosure game, not…

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