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
| Metric | Q2 FY26 | Q1 FY26 | QoQ | Commentary |
|---|---|---|---|---|
| AUM | ₹14,166 Cr | ₹13,400 Cr | +6% | 54% D2C mix; MSME the poster child |
| NIM | 9.3% | 8.9% | +40 bps | Repo magic finally shows |
| Cost of Funds | 8.5% | 8.9% | -40 bps | CFO achieved what RBI only dreams of |
| GNPA | 1.15% | 1.2% | Stable | Even Excel couldn’t mess this up |
| Credit Cost | 2.7% | 3.0% | -30 bps | Collection agents earned their bonus |
| PAT | ₹92 Cr | ₹81 Cr | +13% | Modest but meaningful |
| RoA | 2.6% | 2.4% | +20 bps | Heading toward guidance |
| RoE | 10.1% | 9.3% | +80 bps | Investors smiled… a little |
Key takeaway:Stable, boring, predictable—exactly what you want from a lender who actually manages risk.
5. Analyst Questions
Q:“Credit cost seems stuck at 2.7%. Improvement soon?”A:“We’d rather under-promise than surprise you with stress later.” (Translation: Stop pushing your luck.)
Q:“Intermediate Retail credit cost jumped—problem?”A:“Just prudent provisioning. Like insurance, but for accountants.”
Q:“Opex rising?”A:“Because we hired people to collect money faster.” (Efficiency by brute force.)
Q:“Stage-2 spike source?”A:“Some unsecured business loans sneezed. Nothing viral.”
Q:“Fintech exposure stress?”A:“No drama. We finance adults, not experiments.”
6. Guidance & Outlook
Northern Arc reaffirmed itsAUM growth target of 20–22%for FY26 and guidedRoA near 2.8%,credit cost 2.6–2.8%, and
