Northern Arc Capital has received an optimistic target price of ₹326 against its current market price of ₹251.90, as analysts highlight the company's strong transformation prospects despite current market skepticism. The financial services company is undergoing a strategic pivot that positions it for substantial growth in the coming years.

Strategic Business Transformation

Northern Arc Capital has been executing a significant strategic shift from wholesale to retail lending since FY22, which has already yielded impressive results. This transition has delivered substantial improvements in key financial metrics:

Strong ROE Growth Trajectory

Analysts project Northern Arc Capital's return on equity may reach 15.7% by FY28E, driven by the continued transition to high-margin direct-to-consumer business. This represents a dramatic improvement from the company's historical performance, with the structural ROE expected to reach 15% compared to approximately 5% in FY21.

The company's long-vintage experience in finance placement and fund management is expected to support fee income growth, strengthening its ability to absorb structurally higher credit costs while maintaining ROE above cost of equity.

Growth Prospects and Expansion Opportunities

The current business model is projected to deliver strong earnings growth, with analysts forecasting a 41% EPS CAGR for FY26-28E. Beyond the immediate growth trajectory, Northern Arc Capital has identified longer-term growth opportunities through:

• Scaling up vehicle finance operations
• Expanding affordable home finance offerings
• Building expertise through intermediate retail routes
• Leveraging D2C growth levers for sustained expansion

Valuation and Market Position

Despite the improving business prospects, Northern Arc Capital trades at a 50-60% valuation discount to its peers, which analysts believe undermines the company's transformation story. The fair value assessment factors in a 20% AUM CAGR and 15% average ROE for FY26-36E, implying valuation multiples of 1.2x FY27E BVPS and 10x FY27E EPS.

Risk Factors and Market Outlook

Analysts have identified key risks that could impact the growth trajectory, including slower asset quality recovery and potential delays in D2C growth execution. Additionally, reducing overleveraging among bottom-of-pyramid customers is expected to aid credit cost improvement during FY26-28E.

The analysis suggests that while the market currently undermines Northern Arc Capital's NIM and ROE improvement prospects due to legacy wholesale mix and recent high credit costs, the company's strategic transformation positions it well for sustained growth and improved profitability in the medium to long term.

Northern Arc Capital Limited, a leading player in India's diversified NBFC sector, has announced a significant change in its senior leadership team. The company disclosed that Umasree Parvathy Pratap will be retiring from her position as Chief People Officer, effective October 31, 2025, due to superannuation. Stepping into this crucial role will be Moushumi Mandal, who has been appointed as the new Chief People Officer, effective November 1, 2025.

A Wealth of Experience

Moushumi Mandal brings to Northern Arc Capital a rich tapestry of experience spanning 25 years, with 18 years dedicated to the financial and technology sectors. Her career includes notable stints at global financial institutions such as JPMorgan and Citibank. Prior to joining Northern Arc, Mandal served as the Vice President of HR at the National Stock Exchange of India Limited and held the position of Vice President at Citibank N.A.

Global Perspective

One of Mandal's key strengths is her extensive international exposure. Her career has taken her across multiple geographies, including India, Sri Lanka, Bangladesh, Japan, Singapore, Hong Kong, Australia, and New York. This global perspective is expected to be valuable as Northern Arc Capital continues to grow and evolve in the dynamic financial services landscape.

Educational Background

Mandal's academic credentials are equally impressive. She holds a degree in Microbiology and a postgraduate degree in Management, specializing in Human Resources, from Mumbai University.

Seamless Transition

The company has ensured a smooth transition in this critical role. Umasree Parvathy Pratap, the outgoing Chief People Officer, will conclude her tenure on October 31, 2025, with Moushumi Mandal taking the reins the very next day. This seamless handover is designed to maintain continuity in the company's human resource strategies and initiatives.

Looking Ahead

As Northern Arc Capital continues its journey as a key player in India's financial services sector, the appointment of Moushumi Mandal as Chief People Officer signals the company's commitment to strengthening its leadership team. Her diverse experience across multiple geographies and sectors is expected to bring fresh perspectives to the company's human resource management and contribute to its growth trajectory.

This leadership change comes at a time when the financial sector is undergoing rapid transformation, driven by technological advancements and changing market dynamics. Mandal's blend of experience in both finance and technology sectors positions her well to guide Northern Arc Capital's workforce through these evolving landscapes.