Shares of Chennai-based Northern Arc Capital on Tuesday made a stellar debut at the bourses as expected following strong response to its IPO. The stock of the company, formerly known as IFMR Capital Finance, was listed at ₹351, a surge of 33.46 per cent from the issue price of ₹263 on the BSE, and finally ended with a gain of 23 per cent at ₹323.60. At the NSE, it opened 33 per cent higher at ₹350 and later ended at ₹322.30, up 22.54 per cent.
Earlier, the IPO saw a robust response from all category investors, the issue being subscribed 110.70 times.
Below expectation
The listing of Northern Arc Capital was slightly below street expectation despite receiving healthy subscription response, as the market sentiment has been subdued since the opening trades, said Prashanth Tapse, Senior VP (Research), Mehta Equities.
“Post listing, we continue to believe that investors should continue to Hold because of an opportunity to hold stake in a diversified financial services platform dedicated to addressing the retail credit needs of under-served households and businesses in India,” he added.
The ₹777-crore IPO was a combination of a fresh issue worth ₹500 crore and an offer for sale (OFS) of worth ₹277 crore, by investor shareholders. Northern Arc Capital had raised ₹229 crore from anchor investors, ahead of IPO. Proceeds from the fresh issue will be used to meet future capital requirements of the company towards onward lending.
Registered with the Reserve Bank of India (RBI) as systemically important, the company is a non-deposit-taking NBFC and has been operating in the financial inclusion space for over a decade. “The company’s focus on serving underserved households and businesses positions it well in the competitive Indian retail lending market. While Northern Arc Capital has demonstrated growth in revenue and profit, challenges such as negative cash flow and a high debt-to-equity ratio need to be considered,” said Shivani.
ICICI Securities, Axis Capital, and Citigroup Global Markets India are the book-running lead managers to the issue.
