Northern Arc Capital Ltd. · NSE:NORTHARC
Northern Arc Capital — Q1 FY2025 Earnings Presentation
36 slides from Northern Arc Capital's earnings presentation, July 2024
Slide 1: Investor Presentation – Q1FY25
Financing the Retail Credit Needs of India’s Underserved Households & Businesses across focused sectors MSME MFI CF VF AHF Agri Investor Presentation – Q1FY25 Listed at AA- (Stable) By ICRA Limited and India Ratings
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… Northern Arc At a 01 Glance 02 Business Growth Robust Risk 03 Management 04 Technology Stack Financial 05 Liability Franchise 06 Performance Board and 07 Management 08 Way Forward
Slide 4: Northern Arc At a glance
Northern Arc At a glance... y + N@RTHERN ARC
Slide 5: Differentiated & Unique Platform Play in India's Retail Credit Market
Differentiated & Unique Platform Play in India’s Retail Credit Market Financing the Retail Credit Needs of India’s Underserved Households & Businesses Focused Sectors MSME MFI CF VF AHF Agri Loans to cater to consumers across the lifecycle Reaching the end customer through a Multi-Chanel Approach to
Slide 6: Expanding Relationships & Distribution reach to scale customer base
Expanding Relationships & Distribution reach to scale customer base Strong Distribution Network through… Own Branches 671 Districts 343 + 137 Partnerships 28 States Originator 335 Partners + 36 7 Union Retail Lending Territories Represents states where NACL has 51 branch presence Partners +3 % Repre
Slide 7: Diversification at the core of our business
Diversification at the core of our business Sector & Product Diversification provides Resilience to the Northern Arc Platform MSME MFI CF VF AHF Agri AUM INR 4,579 Cr INR 2,604 Cr INR 3,441 Cr INR 713 Cr INR 380 Cr INR 152 Cr Self-employed Customer Micro-entrepreneurs Salaried, Self Salaried and sel
Slide 8: Data and Collection Platform which creates strong network effects
Data and Collection Platform which creates strong network effects Multi-channel approach that has impacted over 101 million+ lives across focus sectors through a ‘digital & data first’ approach A flywheel re-generating flows across the ecosystem Demand of Credit Supply of Credit MSME 335 nPOS 1,150+
Slide 9: Northern Arc Business Growth
Northern Arc Business Growth…
Slide 10: Demonstrated consistent growth in business and profitability
Demonstrated consistent growth in business and profitability Robust growth in Balance sheet with focus on granularization Assets Under Management (INR crore) 11,710 11,869 10,081 10,602 7,987 9,009 8,979 7,108 7,044 7,692 5,341 6,168 5,388 Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Sep-22 Dec-22 Mar-23 Jun-
Slide 11: Northern Arc - High Performing Matrix
Northern Arc - High Performing Matrix INR 7,616 Cr INR 11,869 Cr Key GTV Lending AUM INR 2,770 Cr Outcomes Fund AUM 38% 32% Large 335 51 343 Network Originator Retail Lending Branches Partners Partners +137 +36 +3 INR 93 Cr 3.1% 14.7% Return Parameters PAT (excluding NCI) RoA RoE 43% 36bps 145bps IN
Slide 12: Across multiple channels of the business
Across multiple channels of the business Gross Transaction Volume Growth in Disbursements Placements Volume Gross Transaction Volume (INR crore) Disbursements (INR crore) Placements Volume (INR crore) CAGR 32.1% CAGR 56.4% 7,616 4,433 2,441 2,600 5,123 5,529 2,068 1,704 3,307 2,411 2,473 1,158 Q1FY2
Slide 13: Balance Sheet Growth led through diversification and granularization
Balance Sheet Growth led through diversification and granularization Assets under Management – By Source Assets under Management – By Sector INR Crore / % INR Crore / % 11,869 11,869 CAGR 30.5% 10% 8,979 8,979 29% 52% 10% 7,044 7,044 24% 45% 16% 30% 5,341 22% 5,341 21% 17% 24% 28% 8% 25% 48% 30% 70%
Slide 14: Enhanced Efficiency for better profitability
& Enhanced Efficiency for better profitability Expansion in Risk adjusted NIMs driven by proactive risk Retail expansion coming at a Robust Growth in Profitability management and marginal increase in cost and superior return matrix granularization of portfolio Risk Adjusted NIMs(1) No. of Branches,
Slide 15: Northern Arc Risk Management
Northern Arc Risk Management
Slide 16: Robust Risk Management Framework and in-house collections infrastructure
Robust Risk Management Framework and in-house collections infrastructure Supported by Independent collections & Analytics and Risk Multi-dimensional Risk Management Practice ecosystem Modelling 0 Pre due reminders to the 35.2mn data points(1) customers collected over a Po Risk l ic G decade y ie ov
Slide 17: Driving Quality Portfolio with One of the Lowest Industry-wide NPAs
Driving Quality Portfolio with One of the Lowest Industry-wide NPAs Diversification augmented by proprietary tools and portfolio granularity driving asset quality & low credit costs Sector Diversification Asset Quality Drivers Granular Portfolio • Exposure (in terms of AUM) Proprietary Scorecards fo
Slide 18: Northern Arc Robust Technology Stack
Northern Arc Robust Technology Stack
Slide 19: Leveraging Technology Stack
Leveraging Technology Stack Empowering Multifold growth through… Configurable Workflows and Data, Dashboards, and Reports Processes • Seamless End to end Journey • Data driven insights powered by Lake • Integrated LMS NORTHERN ARC • Configurable reports • Fully customizable BREs TECH PLATFORM • Cust
Slide 20: Northern Arc Liability Franchise
Northern Arc Liability Franchise
Slide 21: Diversified Sources of Funding and Proactive Liquidity Management
Diversified Sources of Funding and Proactive Liquidity Management Well-diversified funding profile Credit Rating Upgrades Total Borrowing Mix as on June’24 Data as of June 30 2024 ICRA Credit Ratings Domestic retail / HNIs , AA- 2% 48 Lender Relationships (Stable) NBFCs, 9% A+ June’24 (Stable) 3.25y
Slide 22: Northern Arc Financial Performance
Northern Arc Financial Performance
Slide 23: Key Financial Matrix
Key Financial Matrix Revenue From Operations (1)* Net Interest Margin (2)* Yields, COF, Spreads (3)* Revenue from Operations (INR crore) 16.9% 17.5% 13.9% 14.1% CAGR 37.3% 9.6% 9.3% 9.3% 8.5% 495 9.1% 8.3% 7.6% 8.2% 370 5.8% 5.5% 253 5.6% 191 4.3% Q1FY22 Q1FY23 Q1FY24 Q1FY25 Q1FY22 Q1FY23 Q1FY24 Q1F
Slide 24: Key Financial Matrix
Key Financial Matrix Improving Return Ratios (1) Capital Adequacy Net worth & Borrowings Return Metrics (ROA, ROE) Net worth and Borrowings (INR crore) Networth Borrowing RoA RoE 14.7% 13.3% 11.0% 8.6% 8,971 29.0% 7,156 23.5% 21.5% 21.5% 5,833 2.8% 3.1% 3,947 2.4% 2.4% 2,777 1,613 1,771 2,006 Q1FY22
Slide 25: Portfolio Quality
Portfolio Quality INR crore / ECL % : provision coverage for each Assets under Management Assets under Management (%) ECL : Expected Credit Loss % stage Jun- By Staging Jun-22 Jun-23 Jun-24 Jun-21 Jun-22 Jun-23 Jun-24 Jun-21 Jun-22 Jun-23 Jun-24 Jun-21 Jun-22 Jun-23 Jun-24 21 Stage I 5,114 6,881 8,5
Slide 26: Consolidated Income Statement
Consolidated Income Statement INR crore Q1 FY22 Q1 FY23 Q1 FY24 Q1 FY25 Growth Growth% Q4 FY24 FY24 Interest income* 173 240 358 481 123 34% 427 1,582 Interest expense 95 125 164 209 45 28% 204 725 Net Interest Income 79 115 194 272 77 40% 224 857 Fee & Other Income 21 17 19 25 7 36% 42 103 Net Reve
Slide 27: Financial Dupont
Financial Dupont Particulars Q1 FY22 Q1 FY23 Q1 FY24 Q1 FY25 Q4 FY24 FY24 Interest Income* 12.2% 12.2% 15.2% 16.2% 15.2% 15.3% Interest Expense 6.7% 6.4% 7.0% 7.0% 7.2% 7.0% Net Interest Income 5.5% 5.8% 8.3% 9.1% 8.0% 8.3% Fee and Other Income 1.4% 0.8% 0.8% 0.8% 1.5% 1.0% Net Revenue 7.0% 6.7% 9.0
Slide 28: Balance Sheet
Balance Sheet INR crore Q1 FY22 Q1 FY23 Q1 FY24 Q1 FY25 FY24 Assets Financial assets Cash and bank balances 483 618 642 589 408 Loans 3,812 5,447 7,205 9,651 9,210 Investments 1,327 1,563 1,433 1,661 1,785 Other financial assets 15 65 116 107 164 Non-financial assets 72 147 140 125 141 Total assets
Slide 29: Northern Arc Board & Management
Northern Arc Board & Management
Slide 30: Experienced and Professional Management Team
Experienced and Professional Management Team Pardhasaradhi Rallabandi Atul Tibrewal Saurabh Jaywant Group Risk Officer & Governance Chief Financial Officer Chief Legal Officer Head 23 years of experience 19+ years of experience 21 Years of experience Gaurav Mehrotra Gaurav Ajit Shukla Umasree Parvat
Slide 31: Distinguished Board and Marquee Investors Driving Strong Governance
Distinguished Board and Marquee Investors Driving Strong Governance Mr. P S Jayakumar Ms. Anuradha Rao Mr. Ashutosh Arvind Pednekar Mr. Arunkumar N.T. Chairman & Non-Executive Non-Executive Non-Executive Non-Executive Independent Director Independent Director Independent Director Independent Directo
Slide 32: ESG Framework
ESG Focused Business Model Positively Impacting 101 Mn+ Lives IVCA Award Impact Assets 50 for Social Impact Featured Consistently in 2023 since 2021 Robust ESG Framework with Effective Tools & Regular UNSDG(1) Alignment Built into the Business Model Monitoring • Committed to responsible financing fr
Slide 33: Northern Arc Way Forward
Northern Arc Way Forward y N@RTHERN ARC
Slide 34: Way Forward
Way Forward Financing the Credit Needs of India’s Underserved Households & Businesses by Credit-first and Customer- Data and technology A Diversified Platform Broad-based Franchise driven Centric Culture ❖ One of the leading players in ❖ Expand presence in Direct to ❖ Focus on improving credit quali
Slide 35: Mission and Vision
Mission and Vision Summary Addressing a Large Addressable Market and Underpenetrated Market with Strong Sectoral VISION MISSION Expertise Our Vision is to be a trusted To enable access to finance platform that enables the for the underbanked in an Large Ecosystem of Partners and Data and Technology
Slide 36: Thank You
Thank You y + N@RTHERN ARC
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