Motilal Oswal Financial Services has initiated coverage on Northern Arc Capital with a BUY rating and a target price of ₹360 per share, indicating a 46% upside from Monday's closing levels. However, in its bull case scenario, the brokerage projects the stock could rally as much as 75%, significantly higher than the initial target. According to reports from CNBC TV18, the stock gained as much as 3% on Tuesday, February 24, following the brokerage's coverage initiation. The target price is based on 1.2x FY28E P/BV, reflecting confidence in the sustainability of its D2C-led growth, improving profitability, and disciplined risk management.
As reported by CNBC TV18, Motilal Oswal projects AUM and PAT CAGR of nearly 20% and 34% respectively over FY26–28E, with return ratios improving to RoA of 3.2% and RoE of 15% by FY28E. The brokerage notes that rural consumption recovery and normalisation trends should support asset quality improvements, aiding sustainable earnings growth. Northern Arc Capital currently has a market capitalisation of ₹4,071.61 crores as of February 24, and is part of the BSE Financial Services sector. According to Motilal Oswal's research, the company has lending AUM of ₹151 billion as of December 2025, demonstrating strong operational scale.
According to CNBC TV18, Northern Arc Capital shares were trading 2.56% higher at ₹252.20 on Tuesday, February 24, following the brokerage's coverage initiation. The stock has shown mixed performance across different time frames, delivering a strong performance, surging 83.05 points, an impressive 48.97% increase in the past year. However, over the past month, it fell by 20.60 points, down 7.54%, and in the past two weeks, it declined by 6.95 points, a 2.68% drop. As of 9:50 am, the shares were up 3.7% or ₹9.1 to trade at 254.75, showing positive momentum following the brokerage's coverage initiation. The stock remains below its IPO price of ₹263, indicating potential for further upside.
As reported by CNBC TV18, the stock trades at 7 times its FY27E P/E estimates, which Motilal Oswal considers attractive given the improving business mix and strong earnings visibility. The brokerage notes that Northern Arc is trading at nearly 0.9x FY27E P/BV and close to 7x FY27E P/E, which underpins the BUY call. Key drivers identified include technology edge through proprietary platforms that enhance sourcing, underwriting, and collections, D2C-led growth expected to boost net interest margins, IR lending stability from diversified, collateralised exposures, and fee income diversification through fund management and placement services. The company has built a strong pan-India presence with 368 branches, 55 digital partners, 357 originator partners, and 1,400+ investor relationships, with no promoter shareholding and all six analysts tracking the stock currently having 'Buy' ratings.
