Northern Arc Capital Ltd. · NSE:NORTHARC
Northern Arc Capital — Q4 FY25 Earnings Presentation
41 slides from Northern Arc Capital's earnings presentation, May 2025
Slide 1: Investor Presentation Q4FY25 & FY25
Investor Presentation Q4FY25 & FY25 Financing the Retail Credit Needs of India’s AA-(Stable) Underserved Households & Businesses across By ICRA Limited & India Ratings focused sectors 1
Slide 2: Disclaimer
Disclaimer "This presentation and accompanying slides (the “Presentation”) has been prepared by Northern Arc Capital Limited (“Company”) to be presented during the analyst call as required under Regulation 46 (2)(o) of the SEBI (LODR) Regulations, 2015, and is not for release, distribution or public
Slide 3: Content
Content… Direct to Customer 01 Business Overview 02 Lending Intermediate Retail 03 Credit Solutions 04 Risk Management Robust Technology Strong Liability 05 Stack 06 Franchise Board & 07 Financials 08 Management 3
Slide 4: Business Overview
Business Overview 4
Slide 5: High Performing Business Matrix – FY25
High Performing Business Matrix – FY25 Gross Transaction Volume Disbursements Placements INR 35,058 Cr INR 19,840 Cr INR 12,393 Cr 23% 33% 5% Lending AUM Fund AUM Direct Customers INR 13,634 INR 3,158 Cr 19,88,485 16% 10% 27% Branches Retail Lending Partners Origination Partners 360 54 350 44 4 22 5
Slide 6: High Performing Financial Matrix – FY25
High Performing Financial Matrix – FY25 PPoP NIM Opex (%) INR 791 Cr 9.1% 3.6% 46% 0.8% -0.4% PAT RoA RoE INR 305 Cr 2.4% 10.0%1 -1.2% -0.5% -4.6% (1) Raised INR 882 Crores of Capital GNPA Net NPA Networth Book Value / Share 0.93% 0.36% INR 3,434 Cr INR 213 0.5% 0.3% 48% 20% 6
Slide 7: Demonstrating growth in AUM and profitability across business cycles
Demonstrating growth in AUM and profitability across business cycles Asset under management INR crore MFI overleverage Demonetization IL&FS Crisis Covid Pandemic stress 13,634 11,710 9,009 7,108 4,342 5,221 2,734 3,664 3,883 1,019 1,655 Mar'15 Mar'16 Mar'17 Mar'18 Mar'19 Mar'20 Mar'21 Mar'22 Mar'23
Slide 8: Business Proposition
Business Proposition Sectors 360 2 mn + MSME Consumer Rural Customers Branches Direct to Customer Lending Channels ➢ Own Branches ➢ Partnership Based Lending 54 Lending – AUM INR 7,064 Cr Partnerships Underwriting Solutions across focus sectors 2.1 lakh 350 1,300+ crore + Lending – AUM INR 6,570 Cr
Slide 9: Direct to Customers Lending
Direct to Customers Lending 9
Slide 10: Direct to Customers Lending: Built a strong retail engine
Direct to Customers Lending: Built a strong retail engine Northern Arc Customer Base Leveraged learnings from the IR business to build : • A strong D2C engine MSME Consumer Finance Rural Finance • A robust underwriting and # Customers 41,000+ 14,50,000 + 4,80,000+ product program Direct – Branch / •
Slide 11: Growth: Strong growth led by expansion and partnerships
Growth : Strong growth led by expansion and partnerships Assets under Management 64% CAGR (Mar-21 to Mar-25) 7,064 INR crore Multi-channel Distribution Model 1,100 5,833 1,512 360 54 Branches Retail Lending 3,390 Partnerships 3,385 2,300 Backed by robust Underwriting & Technology 1,010 1,659 1,091 3
Slide 12: Consumer Finance
Consumer Finance Assets under Management 120% CAGR (Mar-21 to Mar-25) Live Partners Ticket Size INR crore 23 Rs. 50,000 – 5,00,000 13 7 2 Net Yield Average Tenure 11 15% - 18% 12 – 48 months 8 7 21 # Customers (‘000) 3,390 2,300 1,458 1,091 1,045 523 457 304 146 80 Mar-21 Mar-22 Mar-23 Mar-24 Mar-25
Slide 13: MSME
MSME Building strong footprint to scale granular portfolio Northern Arc’s Value Proposition End to end digital journey Competitive pricing 69 Branches Handholding till Ease of documentation 13 7 loan closure 7 States 2 10 Strong in-house collections Average Bureau – 600+ 8 8 550+ Employee Infrastruc
Slide 14: Rural Finance
Rural Finance Pan India Presence Product Characteristics 287 Branches ATS – INR 45,000 Yield – 24% - 25% 19 19 13 37 12 12 9 States and 1 UT ` Average Tenure – 24 JLG Product & Individual 2 months loans 11 84 8 7 1,500+ Employee Strength Digitally led journey throughout sourcing, risk, credit with l
Slide 15: Intermediate Retail Credit Solution Business
Intermediate Retail Credit Solution Business 15
Slide 16: Lending to Intermediate Partners
Lending to Intermediate Partners Gross Transaction Volume Lending Book 18% GTV CAGR (FY21 to FY25) 350 Originator Partners 12% AUM CAGR (Mar-21 to Mar-25) 6,570 INR crore INR crore 5,877 22,515 5,449 5,623 20,961 20,500 16,507 4,235 11,621 FY21 FY22 FY23 FY24 FY25 Mar-21 Mar-22 Mar-23 Mar-24 Mar-25
Slide 17: Fee Based Franchise: Building on top of the balance sheet
Fee Based Franchise : Building on top of the balance sheet Northern Arc’s Unique Fee Franchise Fund Management AltiFi • NAIM manages debt funds that invest largely in the sub-set of Originator • Alternative retail debt investment platform that Partners and mid-market companies facilitates fixed-inco
Slide 18: Risk Management
Risk Management 18
Slide 19: Robust Risk Management Framework
Robust Risk Management Framework Robust risk management framework based on sector expertise, ground-level insights, extensive data analytics and proprietary risk models Manage organizational risks Using our Suite of Risk Analysis Tools Through Deep Domain Knowledge and Transaction Qualitative Field-
Slide 20: Deep focus on collections
Deep focus on collections Use of Data & Analytics Omni-channel Pro-active monitoring to Legal Cell covering all across Collections payments contain stress relevant laws lifecycle infrastructure Pre-Delinquency X Bucket Initial – Mid Write-off Deep Buckets Management Collection Buckets Recoveries Pre
Slide 21: Sector wise asset quality
Sector wise asset quality Credit Cost (%) Credit Cost (%) FY25 INR Crores AUM* GNPA (%) FY25 (excl one-time provision) Intermediate Retail 6,570 0.60% 1.5% 1.5% MSME 2,574 2.76% 2.5% 1.7% Consumer 3,390 0.43% 6.0% 4.2% Rural 1,100 0.07% 6.8% 6.8% Total 13,634 0.93% 3.2%1 2.6%2 1. Includes additional
Slide 22: Diversified & Granular portfolio resulting in GNPAs below 1%
Diversified & Granular portfolio resulting in GNPAs below 1% Diversification augmented by proprietary tools and portfolio granularity driving asset quality Sector Diversification Asset Quality Drivers Granular Portfolio • Exposure (in terms of AUM) Proprietary Scorecards for towards Top 10 borrowers
Slide 23: Portfolio Quality
Portfolio Quality INR ECL % : provision coverage for each Assets under Management Assets under Management (%) ECL : Expected Credit Loss crore/% stage By Mar’24 Jun’24 Sep’24 Dec’24 Mar’25 Mar’24 Jun’24 Sep’24 Dec’24 Mar’25 Mar’24 Jun’24 Sep’24 Dec’24 Mar’25 Mar’24 Jun’24 Sep’24 Dec’24 Mar’25 Stagin
Slide 24: Robust Technology Stack
Robust Technology Stack 24
Slide 25: Leveraging Technology Stack
Leveraging Technology Stack Lead Generation Customer Onboarding Credit Underwriting Pre-Disbursal Loan Disbursal Loan Servicing • Digital form • OKYC/EKYC PD with customer CAM • E-Nach • Digital disbursal • Customer app summary assessment IMPS/RTGS/NEFT • Feet on Street • PAN verification • E-Sign •
Slide 26: SaaS Offerings
SaaS Offerings : NuScore nPOS A Machine-Learning-Based Solution to Aid Originators in their Connecting banks & financial institutions through APIs, enabling Underwriting swift data exchange & straight through processing of loans Borrower level assessment along with a detailed analytics report Co-len
Slide 27: Strong Liability Franchise
Strong Liability Franchise 27
Slide 28: Diversified sources of funding
Diversified sources of funding… Borrowings Cost of Funds (1) INR crore 10.5% Increase in Risk Weights for NBFC Exposure in FY24 10.0% 10.2% 250 basis points repo 9.5% rate hike during FY23 9.0% 9.2% 9.0% 8.5% 8.6% 8.8% 9,860 8.0% 9,048 7,035 7.5% 5,983 7.0% 3,932 6.5% 6.0% FY21 FY22 FY23 FY24 FY25 M
Slide 29: With proactive liquidity management
…With proactive liquidity management Liquidity position INR crore Cash & Bank Balance Undrawn Sanction Consistently adhered to all 1,265 RBI norms as well as ALCO guidelines clearly 978 960 reflecting strong Asset Liability position 803 754 742 647 466 423 408 No negative cumulative Mar-21 Mar-22 Ma
Slide 30: Financials
Financials 30
Slide 31: Key Business Indicators
Key Business Indicators : Gross Transaction Volume Asset Under Management Increasing Share of Direct to Customer Lending INR crore INR crore INR crore CAGR 28% CAGR 27% D2C AUM D2C Mix% 35,058 13,634 52% 8 ,000 60% 50% 29,324 11,710 7,000 27,385 50% 38% 6,000 9,009 40% 19,896 5,000 7,108 13,054 4,00
Slide 32: Key Financial Indicators
Key Financial Indicators : Total Income Fee & Other Income Pre-Provisioning Operating Profits (PPoP) INR crore INR crore CAGR 35% CAGR 33% 2,071 791 1,685 97 102 543 88 88 1,190 864 61 360 657 285 235 FY21 FY22 FY23 FY24 FY25 FY21 FY22 FY23 FY24 FY25 FY21 FY22 FY23 FY24 FY25 Credit Cost % Opex (%) Y
Slide 33: Consolidated Income Statement
Consolidated Income Statement INR crore Q4 FY24 Q3 FY25 Q4 FY25 YoY % QoQ % FY24 FY25 YoY% Interest income1 434 478 519 20% 8% 1,588 1,969 24% Interest expense 204 211 198 -3% -6% 725 823 13% Net Interest Income 230 267 320 39% 20% 863 1,147 33% Fee & Other Income 35 21 30 -16% 41% 97 102 5% Net Rev
Slide 34: Financial Dupont
Financial Dupont Particulars Q4FY24 Q3FY25 Q4FY25 FY24 FY25 Interest Income* 15.4% 15.0% 16.2% 15.3% 15.7% Interest Expense 7.2% 6.6% 6.2% 7.0% 6.5% Net Interest Income 8.2% 8.4% 10.0% 8.3% 9.1% Fee and Other Income 1.3% 0.7% 0.9% 1.0% 0.8% Net Revenue 9.5% 9.0% 10.9% 9.3% 9.9% Employee Costs 2.4% 2
Slide 35: Balance Sheet
Balance Sheet INR crore Mar’24 Jun’24 Sep’24 Dec’24 Mar’25 Assets Financial assets Cash and bank balances 408 589 811 513 647 Loans 9,210 9,651 10,004 9,520 10,572 Investments 1,785 1,661 1,766 1,976 2,052 Other financial assets 164 107 179 183 144 Non-financial assets 141 125 176 210 223 Total asse
Slide 36: Board & Management
Board & Management 36
Slide 37: Board of Directors
Board of Directors : Mr. P S Jayakumar Ms. Anuradha Rao Mr. Ashutosh Arvind Pednekar Mr. Sandeep Dhar Chairman & Non-Executive Non-Executive Non-Executive Non-Executive Independent Director Independent Director Independent Director Independent Director ---------------------------------------- ------
Slide 38: Management
Management : Pardhasaradhi Rallabandi Atul Tibrewal Saurabh Jaywant Group Risk Officer & Governance Chief Financial Officer Chief Legal Officer Head 31+ years of experience in Banking 22+ years of experience in finance 22+ years of experience in Previously associated with Previously associated with
Slide 39: ESG Framework
ESG Focused Business Model Positively Impacting 118 Mn+ Lives Robust ESG Framework with Effective Tools & Regular UNSDG(1) Alignment Built into the Business Model Monitoring • Committed to responsible financing framework • Adherence to Leapfrog’s ‘Responsible Investment Code’ Group Level • Adoption
Slide 40: Empowering community through CSR
Empowering community through CSR Education Supported 60 students from rural Upgrading rural school Will support elementary students Supported differently-abled Karnataka by funding their infrastructure in Wada block, in Andhra Pradesh, Karnataka, children through a residential graduation, providing
Slide 41: Thank you!
Thank you! For any query, please contact : Atul Tibrewal Chief Financial Officer atul.tibrewal@northernarc.com Chetan Parmar Head Investor Relations chetan.parmar@northernarc.com 41