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 , a leading diversified Non-Banking Financial Company (NBFC), has announced its financial results for the second quarter ended September 30, 2025, showcasing steady growth and strategic appointments to its board.

Financial Highlights

• Profit After Tax (PAT): Grew by 13% quarter-on-quarter to INR 92.00 crore in Q2FY26.
• Assets Under Management (AUM): Increased by 15% year-on-year and 6% quarter-on-quarter to INR 14,166.00 crore.
• Net Interest Income: Rose by 12% year-on-year and 8% quarter-on-quarter to INR 322.00 crore.
• Net Interest Margin (NIM): Improved by 37 basis points quarter-on-quarter to 9.30%.
• Credit Cost: Improved to 2.70% in Q2FY26 from 3.00% in Q1FY26.
• Asset Quality: Gross NPA and Net NPA ratios remained stable at 1.15% and 0.56% respectively.
• Capital Adequacy: Maintained a healthy ratio of 24.60% as of September 30, 2025.

Operational Performance

• Direct to Customer (D2C) lending increased to 54% of the total AUM.
• Excluding rural finance, where exposure remains calibrated, D2C AUM grew 32% year-on-year to INR 6,718.00 crore.
• Performing Credit Fund AUM grew by 14% year-on-year to INR 3,198.00 crore.
• Placement volumes for H1FY26 were INR 5,399.00 crore.

Board Appointments

The company announced two key appointments to its board:

1. Ms. Vidya Krishnan: Appointed as an Additional Director (Non-Executive Independent) for a period of 5 consecutive years, subject to shareholder approval. Ms. Krishnan brings extensive expertise in banking, information technology, digital transformation, and business leadership across retail, wholesale, and investment banking.

2. Ms. Anuradha Rao: Appointed as an Additional Director (Non-Executive, Non-Independent) for a period of 1 year, subject to shareholder approval. Ms. Rao has approximately 36 years of experience in banking and finance, having previously worked at the State Bank of India.

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."

He added, "Our AUM grew 15% YoY and 6% QoQ to ₹14,166 crore. The D2C AUM grew 17% YoY, and excluding rural finance — where exposure remains calibrated — D2C AUM growth stood at a strong 32% YoY. Credit cost improved to 2.7% from 3.0% in Q1FY26, driven by a revival in consumption trends and an improving economic environment."

Future Outlook

The company remains confident of achieving its guided AUM growth of 18–20% and Return on Assets (RoA) of around 2.80% for FY26. The management's focus on sustainable lending and long-tenured retail products is expected to help stabilize delinquencies.

Northern Arc Capital continues to empower underserved individuals and businesses, having facilitated the financing of over INR 2.30 trillion cumulatively since 2009, impacting the lives of over 129 million people across India.