Northern Arc Capital shares list at 33% premium over IPO price. Hold or sell?

Northern Arc Capital IPO listing: The stock opened at Rs 351 on the Bombay Stock Exchange, up 33.5% from its issue price of Rs 263. Similarly, it listed at Rs 350 on the National Stock Exchange.

In Short

• Northern Arc Capital lists at 33% premium over issue price
• Shares opened lower than expected grey market premium of 50%
• Experts recommend holding shares for long-term growth potential

Northern Arc Capital made a solid debut on the stock market today, with its shares listing at a 33% premium over the IPO issue price.

The stock opened at Rs 351 on the Bombay Stock Exchange (BSE), up 33.5% from its issue price of Rs 263. Similarly, it listed at Rs 350 on the National Stock Exchange (NSE).

Although the listing showed a healthy gain, it fell short of expectations set by grey market activity, where shares were trading at nearly a 50% premium prior to the listing. Despite this, the company’s listing reflects positive investor sentiment.

Northern Arc Capital’s IPO, priced between Rs 249–263 per share, aimed to raise Rs 777 crore. This included a fresh issue of 1.9 crore shares valued at Rs 500 crore and an offer for sale of 1.05 crore shares worth Rs 277 crore.

The IPO saw strong interest, receiving bids 116.92 times the offered shares. The retail portion was subscribed 31.57 times, while the Qualified Institutional Buyers (QIB) and Non-Institutional Investors (NII) categories were subscribed 242.73 and 147.37 times, respectively.

Hold or book profit?

Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd., remarked on the listing, saying, “The listing was slightly below street expectations, despite a strong subscription response. Given the current market sentiment, we recommend investors hold onto their shares. Northern Arc Capital is well-positioned for long-term growth due to its strong focus on serving the retail credit needs of underserved households and businesses in India, particularly in sectors like MSMEs, microfinance, and consumer finance.”

Shivani Nyati, Head of Wealth at Swastika Investmart Ltd., shared a similar outlook, noting the company's solid debut at Rs 350, a 33% premium. She highlighted Northern Arc’s significant role in providing over Rs 1.73 trillion in financing to more than 101.82 million people across India.

However, Nyati also flagged concerns regarding the company’s negative cash flow and high debt-to-equity ratio.

For investors, Nyati recommends a balanced approach: “Given the competitive landscape and financial challenges, investors may consider booking part profits. For those wanting to hold for the long term, keeping a stop-loss at the issue price of Rs 263 would be prudent.”

With its focus on underserved markets, Northern Arc Capital’s future looks promising, though challenges in financial metrics should be monitored closely.

(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)