Northern Arc Capital Limited Q2 FY26 Concall Decoded – When Prudent Becomes Profitable (and Boringly Predictable)

1. Opening Hook

In a quarter where NBFCs either bragged about growth or blamed liquidity, Northern Arc just smiled and said, “We’re doing both.” The lender turned on its “risk Jedi” mode—tight underwriting, CGFMU insurance shields, and a CFO who’s visibly in love with basis points. Management called the quarter “steady,” which in finance-speak means “we didn’t screw up.” And with RoA at 2.6% and NIMs expanding like a happy balloon, Northern Arc looks like the only adult left in India’s credit house party. Keep reading—because this call was full of quiet confidence, cautious growth, and just a dash of fintech shade.

2. At a Glance

• AUM ₹14,166 Cr (↑15% YoY) – Growth “calibrated,” or as CFOs say, caffeine with discipline.
• Net Interest Income ₹322 Cr (↑12%) – Yielded 16.3%; sunlight for the balance sheet.
• NIM 9.3% (↑40 bps QoQ) – Repo cuts finally trickled down. It only took six months.
• PAT ₹92 Cr (↑13% QoQ) – Profits aren’t sprinting, but they’re jogging well.
• Credit Cost 2.7% (↓30 bps QoQ) – Defaults went on a diet.
• GNPA 1.15%, NNPA 0.56% – Asset quality cleaner than auditor’s conscience.
• RoA 2.6%, RoE 10.1% – Slowly sneaking into “elite NBFC” territory.
• Debt/Equity 2.8x (↓from 3.9x) – Finally learned that leverage isn’t love.

3. Management’s Key Commentary

“India continues to demonstrate remarkable resilience.”
(Translation: We’ll pretend global chaos doesn’t apply to us. 😏)

“Our AUM grew 15%, but excluding rural, it’s 22%.”
(Always keep a backup number that looks prettier.)

“MSME grew 42% YoY; Consumer Finance up 24%.”
(Apparently, small businesses and shoppers both borrowed confidence.)

“Credit cost down to 2.7%, within guidance.”
(CFO basically said, ‘I told you so.’)

“We added 100 people and 15 branches.”
(Hiring spree = optimism + Excel projections on steroids.)

“Repo rate cut benefits have started reflecting.”
(Meaning banks finally remembered to pick up RBI’s calls.)

“We’re well positioned to deliver 20%-22% AUM growth and 2.8% RoA.”
(And if not, they’ll call it ‘calibrated prudence’ again.)

4. Numbers Decoded