Northern Arc Capital Q3 Profit Hits Record ₹101 Crore

Introduction

Northern Arc Capital Limited has reported a robust financial performance for the third quarter of the fiscal year 2026, achieving its highest-ever quarterly profit after tax. For the period ending December 31, 2025, the company not only saw significant growth in profitability but also surpassed a major milestone in its lending portfolio, underscoring a period of strong operational execution and strategic expansion.

Record Profitability in Q3

Northern Arc Capital announced a Profit After Tax (PAT) of ₹101 crore for Q3 FY26. This figure represents a substantial 33% increase compared to the same quarter in the previous year and a 10% rise from the preceding quarter. This achievement marks the highest quarterly profit in the company's history, signaling strong earnings momentum. The profit growth was supported by healthy income streams and effective management of operational costs.

AUM Crosses Key Milestone

The company's lending Assets Under Management (AUM) crossed the ₹15,000 crore threshold, reaching ₹15,121 crore as of December 31, 2025. This reflects a solid 23% year-on-year growth and a 7% sequential growth from the previous quarter. The expansion in AUM is a direct result of the company's successful lending strategies and growing market presence.

Strong Income Growth

Net Interest Income (NII) for the quarter stood at ₹371 crore, a significant increase of 39% year-on-year and 15% quarter-on-quarter. This growth in NII indicates improved earnings from the core lending business. Furthermore, Fee & Other Income also demonstrated impressive growth, rising by 49% year-on-year and 50% quarter-on-quarter to reach ₹32 crore. The surge in fee income points to the successful diversification of revenue beyond traditional interest margins.

Operational Efficiency and Pre-Provision Profit

The company's Profit Before Provisioning, Depreciation, and Amortisation (PPoP) grew by 51% year-on-year and 24% quarter-on-quarter to ₹265 crore. The growth in PPoP outpaced the NII growth, suggesting effective cost management and strong operating leverage within the business. The credit cost for the quarter was reported at ₹130 crore.

Strategic Shift to D2C Lending

A key driver behind the AUM growth has been the increasing focus on Direct to Customer (D2C) lending. The D2C portfolio now constitutes 56% of the total AUM. This strategic shift is helping Northern Arc build a more diversified and granular loan book, reducing concentration risk and potentially improving margins. The company's Performing Credit Fund AUM also saw a healthy 15% year-on-year growth, reaching ₹3,207 crore.

Asset Quality Remains Stable

Northern Arc Capital maintained a stable asset quality profile during the quarter. The Gross Non-Performing Assets (NPA) ratio stood at 1.36%, while the Net NPA ratio was at 0.69% as of December 31, 2025. The company holds a Provisioning Coverage Ratio (PCR) of 49% on Stage III assets, indicating a prudent approach to managing potential credit losses and safeguarding its balance sheet.

Capital Position and Net Worth

The company's financial resilience is further highlighted by its strong capital base. The Capital Adequacy Ratio (CAR) was 23.1%, well above the regulatory requirement. This provides a solid buffer to absorb unexpected losses and support future business growth. The Net Worth of the company grew by 11% year-on-year to ₹3,788 crore.

Management Outlook

Management expressed a positive outlook on the company's performance, citing strong momentum in consumption. MD & CEO Ashish Mehrotra highlighted the achievement of crossing ₹15,000 crore in AUM and recording the highest-ever quarterly PAT. He attributed the strong growth to improving consumption trends and expects this momentum to continue through the final quarter of the financial year. The company remains focused on its mission to facilitate capital flow between investors and borrowers.

Market Reaction

Following the strong results, the market responded positively. Shares of Northern Arc Capital ended higher on Friday, January 30, 2026, closing at ₹272.01 on the NSE, an increase of 3.01%.

Conclusion

Northern Arc Capital's Q3 FY26 results demonstrate a period of significant achievement, marked by record profits and substantial AUM growth. The company's strategic focus on D2C lending, stable asset quality, and a strong capital position provide a solid foundation for sustained performance. Investors will continue to monitor the company's ability to maintain its growth trajectory while managing asset quality in a dynamic market.