In challenging external business conditions, Northern Arc has delivered an excellent set of numbers. Gross NPA’s have risen marginally from 0.47% to 0.6%. However, what is heartening to see is that the company has consciously decreased the MFI book from 23% as of March ’24 to sub 20% now.Also NIM’s are stable at 9.1% and cost of funds have declined from 9.3% to 8.9%.
With 65% of the borrowings floating in nature, the company seems well positioned to benefit from the anticipated lower interest environment in the future.
On the asset front, around 35% to 40% of the total assets are floating, linked to the internal benchmark rates subject to the interest rate sensitivity, which should give a fillip to the NIM’s going forward. At a trailing P/B of 1.2 times, it could be a strong rerating candidate going forward.
D: Invested.
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