Q2 2026 Northern ARC Capital Ltd Earnings Call Transcript
Key Points
- Northern Arc Capital Ltd (NSE:NORTHARC) reported a 15% year-on-year growth in Assets Under Management (AUM), reaching INR 14,166 crores.
- The Direct-to-Customer (D2C) segment, which accounts for 54% of total AUM, grew by 17% year-on-year, driven by strong momentum in the MSME space.
- The company's credit cost improved to 2.7% in Q2 FY26 from 3% in Q1, indicating better asset quality and stronger collections.
- Net Interest Income (NII) increased by 12% year-on-year, with a notable improvement in the yield on advances and cost of funds.
- Northern Arc Capital Ltd (NSE:NORTHARC) maintains a strong capital adequacy ratio of 24.6%, providing ample headroom for future growth.
- The company's credit cost guidance for the full year remains between 2.6% to 2.8%, suggesting limited room for further reduction.
- The OpEx ratio increased to 3.7% in Q2, primarily due to investments in strengthening the MSME team and collection infrastructure.
- The Intermediate Retail segment experienced higher credit costs due to prudent provisioning, indicating potential stress in this area.
- Stage two provisions saw a spike, particularly in the unsecured business loan segment, reflecting increased risk.
- The company's fee and other income were subdued at 0.6% of ROA, indicating potential challenges in generating non-interest income.
Ladies and gentlemen, good day and welcome to Northern AR Capital Q2F526 earnings call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing, then 0 on your touchstone phone. Please note that this conference is being recorded.
I now hand the conference over to Par Jariwala from Dam Capital. Over to you, sir.
Thank you.
Good evening, everyone. Welcome to Q2 FY26 earnings call of Northera Capital Limited.
I thank the management for giving us the opportunity to host a call. From the management team, we have Mr. Ashish Mehrotra, Managing Director and CEO, Mr. Atul Trehan, Chief Financial Officer, Mr. Patwardhan Ralabandi, Group Risk Officer and Governance Head, and Mr. Chetan Parmar, Head of Investor Relations. Without further ado, I'll hand over the call to Mr. Ashish Mehrotra, MD, for his opening remarks, post which we
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