Northern Arc Capital Limited , a leading diversified non-banking financial company (NBFC), has announced its financial results for the second quarter of fiscal year 2026, demonstrating resilient growth amid a gradually improving economic environment.

Key Highlights

• Profit After Tax (PAT) for Q2 FY26 grew by 13% quarter-on-quarter to INR 92.00 crore
• Lending Assets Under Management (AUM) increased by 15% year-on-year and 6% quarter-on-quarter to INR 14,166.00 crore
• Credit cost improved to 2.7% in Q2 FY26 compared to 3.0% in Q1 FY26
• Gross NPA and Net NPA ratios remained stable at 1.15% and 0.56% respectively
• Networth grew by 10% year-on-year to INR 3,663.00 crore as of September 30, 2025
• Capital adequacy ratio stood at a healthy 24.6% as of September 30, 2025

Financial Performance

Northern Arc Capital's financial performance in Q2 FY26 reflects its strategic focus on sustainable growth and asset quality management. The company's Net Interest Income (NII) grew by 12% year-on-year and 8% quarter-on-quarter to INR 322.00 crore. The Net Interest Margin (NIM) improved by 37 basis points quarter-on-quarter to 9.3% in Q2 FY26, indicating improved profitability on its lending operations.

The company's operating expenses ratio stood at 3.7% for Q2 FY26, reflecting its efforts to maintain operational efficiency. The Pre-Provision Operating Profit (PPoP) for the quarter was INR 213.00 crore.

Asset Quality and Provisioning

Northern Arc Capital has maintained a stable asset quality profile, with Gross NPA and Net NPA ratios remaining unchanged at 1.15% and 0.56% respectively. The company's credit cost improved to 2.7% in Q2 FY26 from 3.0% in the previous quarter, indicating better risk management and collection efficiency.

Business Growth

The company's lending AUM grew by 15% year-on-year and 6% quarter-on-quarter to INR 14,166.00 crore as of September 30, 2025. Notably, the share of Direct to Customer (D2C) lending in the AUM increased to 54%, reflecting the company's focus on retail lending. Excluding rural finance, where exposure remains calibrated, the D2C AUM grew by 32% year-on-year to INR 6,718.00 crore.

Northern Arc Capital's Performing Credit Fund AUM also showed strong growth, increasing by 14% year-on-year to INR 3,198.00 crore as of September 30, 2025.

Management Commentary

Ashish Mehrotra, MD & CEO of Northern Arc Capital, commented on the results: "We are witnessing early signs of a credit revival, supported by the repo rate cuts earlier this year and the Government's recent stimulus through GST rate reductions. A normal monsoon is expected to further strengthen rural demand and stability. We are confident that these measures and developments will lead to better credit uptake in the second half of this year."

He further added, "Credit cost improved to 2.7% from 3.0% in Q1FY26, driven by a revival in consumption trends and an improving economic environment, which strengthened collections in the Consumer Finance segment. We also saw a decline in MFI provisions, supported by portfolio calibration and the fact that 80% of the MFI book now comprises loans originated post the MFIN guardrails, with 40% covered under Credit Guarantee Fund for Micro Units (CGFMU)."

Outlook

With the positive trends observed in Q2 FY26, Northern Arc Capital remains confident of achieving its guided AUM growth of 18-20% and Return on Assets (RoA) of around 2.8% for FY26. The company's focus on sustainable lending practices and long-tenured retail products is expected to help stabilize delinquencies and support future growth.

As Northern Arc Capital continues to navigate the evolving economic landscape, its strong capital position, improving asset quality, and strategic focus on retail lending position it well for sustained growth in the coming quarters.

Note: All financial figures are in Indian Rupees (INR) unless otherwise stated.

Northern Arc Capital Limited (NSE/BSE: NORTHARC) has witnessed a significant change in its shareholding structure as Catalyst Trusteeship Limited released 40,55,000 equity shares from pledge. The shares, previously held as security for Non-Convertible Debentures (NCDs) issued by Dvara Holdings, were released back to the latter in multiple tranches between April and September 2025.

Impact on Shareholding

The release of shares has resulted in a notable decrease in Catalyst Trusteeship's encumbered shareholding in Northern Arc Capital. Prior to the release, Catalyst Trusteeship held 5.14% of the total share capital, which has now reduced to 2.63%.

Release Details

The share release was executed across several dates:

• April 8, 2025
• May 2, 2025
• June 11, 2025
• July 1, 2025
• September 22, 2025

Catalyst Trusteeship Limited acted in its capacity as the Debenture Trustee for Dvara Holdings' debenture holders throughout this process.

Company Overview

Northern Arc Capital Limited, listed on both the Bombay Stock Exchange (BSE) and the National Stock Exchange of India (NSE), has a total equity share capital of 16,14,11,836 shares, each with a face value of INR 10.00. The company's diluted share capital stands at 16,72,89,926 equity shares.

Regulatory Compliance

This transaction was disclosed in accordance with Regulation 29(2) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011. The disclosure, filed on September 24, 2025, provides transparency regarding the changes in substantial shareholding of Northern Arc Capital Limited.

Market Implications

While the release of pledged shares does not directly impact Northern Arc Capital's operations, it represents a significant shift in the company's shareholding pattern. Investors and market analysts may view this development as a positive sign, potentially indicating improved financial health for Dvara Holdings, which was able to secure the release of its pledged shares.

As Northern Arc Capital continues to navigate the financial landscape, stakeholders will likely keep a close eye on any further developments in its ownership structure and strategic direction.