Northern Arc Capital Ltd. · NSE:NORTHARC
Northern Arc Capital — Q2 FY2025 Earnings Presentation
38 slides from Northern Arc Capital's earnings presentation, October 2024
Slide 1: Investor Presentation Q2FY25 & H1FY25
Investor Presentation Q2FY25 & H1FY25 Financing the Retail Credit Needs of India’s AA-(Stable) Underserved Households & Businesses across By ICRA Limited & India Ratings focused sectors
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 on India's Retail Credit Market
Differentiated & Unique Platform play on India’s Retail Credit Market Financing the Retail Credit Needs of India’s Underserved Households & Businesses Focused Sectors MSME MFI CF VF AHF Agri Reaching the end customer through a Multi-Chanel Approach to credit… Lending Placements Fund Management Throu
Slide 6: Expanding Relationships & Distribution reach to scale customer base
Expanding Relationships & Distribution reach to scale customer base Wide Geographic reach through… Own Branches 19.7 lakh Direct 370 Customers Partnerships 686 Districts Originator 341 Partners Exposure% Retail Lending 28 States 13% 53 Partners Employees 7 Union <1% Territories 3,312 Represents stat
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 4,723 Cr INR 2,398 Cr INR 3,723 Cr INR 846 Cr INR 465 Cr INR 153 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 111 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 341 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 12,309 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'
Slide 11: High Performing Matrix – Q2FY25
High Performing Matrix – Q2FY25 Disbursements Lending AUM Fund AUM Key Outcomes INR 5,035 Cr INR 12,309 Cr INR 2,812 Cr 23% 22% NIM RoA RoE Return Parameters 9.1% 3.1% 12.7% 128 bps 6bps GNPA PAT Net worth 0.60% Financial Efficiency INR 98 Cr 3,316 Cr 24% 56% NNPA 0.18% Raised fresh Equity capital o
Slide 12: Healthy growth in transactions volume
Healthy growth in transactions volume Gross Transaction Volume INR crore CAGR 31% 27,385 29,324 19,896 16,722 13,054 14,473 8,943 7,616 9,116 FY21 FY22 FY23 FY24 Q2FY24 Q1FY25 Q2FY25 H1FY24 H1FY25 Growth in Disbursements INR crore CAGR 54% 14,885 11,788 8,982 9,467 6,551 4,093 4,078 4,433 5,035 FY21
Slide 13: Balance Sheet Growth led through diversification
Balance Sheet Growth led through diversification Assets under Management – By Sector INR Crore / % 22% YoY 12,309 CAGR 31% 11,869 11,710 12% 10% 10% 10,081 9,009 12% 27% 29% 30% 14% 7,108 24% Conscious Calibration in 21% MFI portfolio. 18% 23% D2C share of 22% 20% 5,221 11% 15% 27% 22% 27% 8% 27% 33
Slide 14: Increasing share of Direct to Customer channels
Increasing share of Direct to Customer channels AUM 5,221 7,108 9,009 11,701 12,309 50% 48% 62% 77% 81% 50% 52% 38% 23% 19% Mar'21 Mar'22 Mar'23 Mar'24 Sep'24 Direct to Customer Intermediate Retail 14
Slide 15: Consistent growth across the sectors with conscious calibration in MFI
Consistent growth across the sectors with conscious calibration in MFI MSME Consumer Finance MFI Others 25% YoY 52% YoY 11% YoY 24% YoY 4,723 3,768 3,723 2,687 2,450 2,398 1,465 1,177 Sep'23 Sep'24 Sep'23 Sep'24 Sep'23 Sep'24 Sep'23 Sep'24 15
Slide 16: Northern Arc Risk Management
Northern Arc Risk Management
Slide 17: 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 40 mn+ data points customers collected over a Po Risk l ic G decade y ie ov Pr
Slide 18: Diversified & Granular portfolio resulting in GNPAs consistently below 1%
Diversified & Granular portfolio resulting in GNPAs consistently below 1% 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 Scoreca
Slide 19: Portfolio Quality
Portfolio Quality INR ECL % : provision coverage for each Assets under Management Assets under Management (%) ECL : Expected Credit Loss crore/% stage By Sep’23 Dec’23 Mar’24 Jun’24 Sep’24 Sep’23 Dec’23 Mar’24 Jun’24 Sep’24 Sep’23 Dec’23 Mar’24 Jun’24 Sep’24 Sep’23 Dec’23 Mar’24 Jun’24 Sep’24 Stagin
Slide 20: Northern Arc Robust Technology Stack
Northern Arc Robust Technology Stack
Slide 21: 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 22: Northern Arc Liability Franchise
Northern Arc Liability Franchise
Slide 23: Diversified Sources of Funding and Proactive Liquidity Management
Diversified Sources of Funding and Proactive Liquidity Management Well-diversified funding profile Credit Rating Upgrades Data as of September 30, 2024 ICRA Credit Ratings AA- NBFCs/Domestic Positive ALM retail / HNIs, 9% across buckets (Stable) A+ Sep’24 (Stable) Offshore FIs and 3.1 yrs Avg Tenure
Slide 24: Northern Arc Financial Performance
Northern Arc Financial Performance
Slide 25: Competitive spreads
Competitive spreads Portfolio Yields % and Cost of Funds %* 17.5% 17.5% 17.0% 16.8% 16.3% 16.8% 14.7% 14.2% 13.9% 10.2% 9.2% 9.2% 9.1% 9.5% 9.3% 8.6% 8.8% 8.9% FY21 FY22 FY23 FY24 Q2FY24 Q3FY24 Q4FY24 Q1FY25 Q2FY25 Portfolio yield CoF NIM % (1) 9.1% 9.1% 9.1% 8.3% 8.2% 7.8% 6.5% 5.6% 5.5% FY21 FY22
Slide 26: Robust growth in profitability
Robust growth in profitability Revenue From Operations * INR crore CAGR 37% 1,685 1,190 1,007 864 756 657 495 511 386 FY21 FY22 FY23 FY24 Q2FY24 Q1FY25 Q2FY25 H1FY24 H1FY25 Profit After Tax (excluding NCI) (INR Cr) CAGR 66% 308 230 172 191 144 79 93 98 68 FY21 FY22 FY23 FY24 Q2FY24 Q1FY25 Q2FY25 H1F
Slide 27: Consolidated Income Statement
Consolidated Income Statement INR crore Q2FY24 Q1FY25 Q2FY25 YoY% QoQ% H1FY24 H1FY25 YoY% FY24 Interest income* 370 481 492 33% 2% 727 973 34% 1,588 Interest expense 174 209 205 18% -2% 338 414 23% 725 Net Interest Income 196 272 288 47% 6% 390 559 43% 864 Fee & Other Income 20 25 26 29% 3% 38 51 32
Slide 28: Financial Dupont
Financial Dupont Particulars Q2FY24 Q1FY25 Q2FY25 H1FY24 H1FY25 FY24 Interest Income* 14.8% 16.2% 15.6% 14.9% 15.8% 15.3% Interest Expense 7.0% 7.0% 6.5% 6.9% 6.7% 7.0% Net Interest Income 7.8% 9.1% 9.1% 8.0% 9.1% 8.3% Fee and Other Income 0.8% 0.8% 0.8% 0.8% 0.8% 0.9% Net Revenue 8.6% 10.0% 9.9% 8.
Slide 29: Balance Sheet
Balance Sheet INR crore Sep’23 Mar’24 Jun’24 Sep’24 Assets Financial assets Cash and bank balances 368 408 589 811 Loans 8,070 9,210 9,651 10,004 Investments 1,673 1,785 1,661 1,766 Other financial assets 130 164 107 179 Non-financial assets 131 141 125 176 Total assets 10,371 11,708 12,133 12,936 L
Slide 30: Diversified Shareholding mix
Diversified Shareholding mix Others, 1% Retail Investors, Marquee Investors Shareholding 14% Mutual Funds & AIFs, 20% 360 One Special Opportunities Fund 16.7% Qualified Institutional Leapfrog Financial Inclusion India (II) Ltd 16.2% Buyer, 3% Augusta Investments II Pte. Ltd. 16.0% Eight Roads Invest
Slide 31: Northern Arc Board & Management
Northern Arc Board & Management
Slide 32: 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 33: 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 34: ESG Framework
ESG Focused Business Model Positively Impacting 111 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 35: Northern Arc Way Forward
Northern Arc Way Forward y N@RTHERN ARC
Slide 36: 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 37: 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 38: 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
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