Northern Arc Q1: consolidated PAT up 46% YoY to ₹114 Cr as credit cost eases, NPM widens
PAT +45.83% YoY · revenue +28.8% · margins expanding
₹779.77 Cr
+28.8% YoY
₹114.1 Cr
+45.83% YoY
14.58%
+1.7pp YoY
₹7.08
Northern Arc Capital opened FY27 with its strongest-ever first quarter: consolidated profit for the quarter rose ~46% YoY to ₹114.1 Cr (the company frames it as +41% on owners' share, ₹114.3 Cr vs ₹81.1 Cr), on total income of ₹782.8 Cr, up ~29% YoY. Net interest income grew 32% YoY to ₹394 Cr and pre-provision operating profit 27% YoY to ₹263 Cr, so the bottom line outpaced the topline — net profit margin widened to 14.6% from 12.9% a year ago. The drop versus Q4FY26 (PAT -14% QoQ, revenue +5% QoQ, NPM 17.8%→14.6%) is a sequential-base effect against a seasonally strong March quarter, not deterioration; the YoY trajectory is the signal.
Q1 FY-2027 vs prior quarters
The print is powered by AUM and asset-quality gains rather than one-offs. Lending AUM grew 26% YoY to ₹16,855 Cr — above management's 22-25% FY27 guide — with the strategic direct-to-customer (D2C) book up 51% YoY to ₹10,766 Cr and now 64% of AUM, essentially at the 65% target. Credit cost fell 44 bps YoY to 2.6%, below the guided 2.7-2.8% band, while GNPA improved 20 bps QoQ to 1.0% and NNPA to 0.5%. The quarter still carries a ₹65.84 Cr geopolitical ECL overlay (flat vs Q4's ₹66.03 Cr) that management retains against unsecured-retail/microfinance risk, so the profit is struck after prudent provisioning, not by releasing buffers.
The stock went into the print at ₹300.1, up 4.2% over the past month of trading.
For context: this is the second-highest quarterly PAT of the last 6 quarters; revenue is at a 6-quarter high.
Management guides for robust AUM growth of 22% to 25% for FY27, driven by the strategic shift to the direct-to-customer business, which is targeted to reach 65% of AUM. They are targeting a Return on Assets (ROA) of over 3% and aim to achieve a Return on Equity (ROE) of 15-17% within the next 8-10 quarters. Credit cost
— This quarter: beat
Against its own guidance the quarter runs ahead on growth and credit cost; the profitability-ratio targets remain work-in-progress — ROA at 2.7% (+29 bps YoY) is still shy of the >3% aim and ROE at 11.5% (+220 bps YoY) tracks toward the 15-17%, 8-10-quarter goal. On the last concall (May 2026) management was confident and optimistic; this print confirms that read on AUM mix, credit cost and asset quality. No formal Street consensus for this smaller-cap NBFC was locatable. Alongside results the board flagged the 18th AGM (Aug 18, 2026) and, separately, ICRA's 'Outstanding' ESG rating (score 81); capital adequacy stayed healthy at 22.7% with net worth up 15% YoY to ₹4,056 Cr. Management's stated caution is external — West Asia geopolitics and El Niño/monsoon risk to the rural book.
W1
D2C share at 64% vs 65% target — whether it clears the milestone next quarter as AUM scales past ₹16,855 Cr
W2
Credit cost holding at 2.6% vs guided 2.7-2.8%, and whether the ₹65.84 Cr geopolitical overlay is utilised or released
W3
ROA (2.7% vs >3% aim) and ROE (11.5% vs 15-17%) closing toward guidance over the coming quarters
Source in ₹ lakhs, converted to Cr. Consolidated PBT 152.94 Cr includes +₹0.35 Cr share of associate profit; NCI a small -₹0.22 Cr loss so total PAT 114.10 Cr ≈ owners' 114.33 Cr (company headlines +41% YoY on owners' share; total profit-for-quarter is +46% vs our records). Current quarter carries a ₹65.84 Cr geopolitical ECL overlay (Q4FY26 ₹66.03 Cr) — a standing buffer, not a one-off. Year-ago Q1FY26 ECL flagged 'not strictly comparable' after a DLG restatement; no clean exceptional item, so no adjusted-growth split needed.