Northern Arc Q1 FY27 Results (NSE: NORTHARC)
Signal: Earnings grew
The read
Standalone PAT of ₹121.8 Cr grew 17.6% YoY on 29.9% revenue growth, continuing the strong momentum from Q4FY26. Asset quality remains sound with GNPA 1.44% and CRAR 22.71%. Sequential profit declined due to higher ECL provisions including a macro overlay of ₹65.8 Cr, reflecting prudent risk management. Operating cost growth outpaced revenue, partly as the company scales its co-lending and assignment business.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹770.2 Cr | 29.9% | 4.8% |
| Net profit | ₹121.8 Cr | 17.6% | |
| EPS | ₹7.54 | 17.5% |
P&L walk
Revenue growth of 29.9% YoY driven by higher interest income; PAT grew 17.6% YoY but declined 12.1% QoQ due to elevated ECL provisions including macro overlay.
Key positives
- Revenue grew 29.9% YoY to ₹770.2 Cr, driven by 35.2% increase in interest income.
- PAT up 17.6% YoY to ₹121.8 Cr.
- Gross Stage 3 assets ratio stable at 1.44% and Net Stage 3 at 0.53%.
- CRAR at 22.71% provides strong capital buffer.
- Net profit margin healthy at 15.81%.
- Co-lending arrangements expanded (9 CLAs, ₹2,118.6 Cr gross outstanding).
Key concerns
- PAT declined 12.1% QoQ due to higher impairment provisions (₹110.5 Cr vs ₹87.3 Cr in Q4FY26).
- Additional ECL overlay of ₹65.8 Cr for macroeconomic uncertainty signals cautious credit outlook.
- Operating expenses (ex-finance & impairment) grew 35.7% YoY, outpacing revenue growth.
- Q1FY25 comparability affected by change in DLG treatment (RBI directive).
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