Northern Arc Capital: HDFC Securities’ Top Diwali NBFC Investment Pick

October 17, 2025: One of the strongest parts of HDFC Securities is the in-depth fundamental and technical analysis of companies and stock price movements. The research team has shortlisted ten picks which an investor can consider for medium to long term investment and get the best returns (and diversification for the portfolio. Northern Arc Capital, a newly listed non-banking finance company NBFC), has also made in the top ten recommendations list by HDFC Securities.
The firm links underserved households and small businesses to debt investors in the microfinance, MSME, consumer, vehicle and affordable housing finance.

Company Overview

Northern ARC is a multi-channel financial services company which deals in a variety of financial products such as lending, placements and fund management. The proprietary NPAS technology of Northern ARC helps offer seamless credit flow for co-lending and on-lending. Northern ARC has provided over 17 million loans, financed 13 billion dollars, and impacted 124 million lives, illustrating a good track record with website operation and market penetration.
Recent Stock Performance
The stock listed on the exchanges after a successful IPO in 2024. It had a strong debut on the stock exchanges as it listed ₹360 per share against the issue price of ₹263 per share. The total market capitalisation of the company is slightly over ₹4300 crores. However, since then the stock has consolidated and is currently trading in the ₹260- ₹270 range.

Fundamentals and Valuation of the Stock

The company has reported reduction in net profit and ROE in the previous financial year. However, the operating revenue has gone up by more than 14.70% in the previous financial year. One of the strongest bouts of the company is its Pan India presence.
Northern Arc has a presence in 28 states and 7 union territories, using the network of its branches and partners to reach as many customers as possible. It has the greatest concentration of assets in Tamil Nadu (14.59%), Maharashtra (11.99%) and Karnataka (9.45%). The company established 57 new branches in 2025 as part of its strategy to expand its direct-to-customer network. It had over 350 originators in its partner ecosystem, covering 682 different districts in the country. The company also has a subsidiary, Pragati, a rural financing initiative that enables it to serve rural populations in the remotest regions of its operating geography.

Key Price Levels to Watch

While the LTP is ₹270, and the target price is ₹333.50, the recommended buy range by HDFC Securities is ₹265-277.

What Makes Northern Arc a Preferred Stock

HDFC Securities appreciates the conservative credit policy, quality assets, sufficient reaction to the rate cut led by the RBI, and a favourable macroeconomic environment as key development drivers in FY26.
The company has established its solid footprint across India, including technology-enabled operations and a focus on underserved segments. While risks remain, the growth profile and macro support provide investors with a healthy risk-reward opportunity in the NBFC space in India

Key Risks to Consider

The firm’s higher exposure to unsecured loans and non-bank borrowers makes it an extreme credit risk bearer. Also, competition among banks, NBFCs, and fintechs, along with the disruption of financing, is a huge threat.