Northern Arc Capital Q4FY26: PAT up 251% to Rs 133 cr

Stock reaction after results

Northern Arc Capital shares moved higher after the lender reported a sharp jump in profit for the March 2026 quarter. The stock rose 6.41% to Rs 305.45 in reaction to the numbers. The move came as investors focused on the company’s improved profitability and lower credit costs. Results were approved by the board on May 8, 2026, covering both standalone and consolidated financials for the quarter and year ended March 31, 2026. The company also conducted an earnings conference call on May 8 at 7:00 PM IST, and made the audio recording available on its website.

Q4FY26 headline performance

For Q4FY26, consolidated net profit rose 250.9% year-on-year to Rs 132.50 crore, according to the market update accompanying the stock move. Revenue from operations increased 23.09% to Rs 741.65 crore over Q4FY25. A separate disclosure summary also reported standalone net profit of 1.38 billion rupees, compared with 467 million rupees a year ago. That same summary put Q4 standalone revenue at 7.3 billion rupees versus 5.9 billion rupees year-on-year. In crore terms, these translate to about Rs 138 crore of standalone net profit and about Rs 730 crore of standalone revenue.

Profit before tax and operating trends

Profit before tax (PBT) for the quarter rose 49.84% year-on-year to Rs 175.57 crore. Management commentary during the earnings call also pointed to stronger operating performance through the year, with pre-provisioning operating profit for FY26 reported at Rs 956 crore and Q4 at Rs 269 crore. The company’s Q4 profitability was supported by both growth in net interest income and lower provisioning needs as credit costs fell. Northern Arc also reported that its net revenue including fee income rose 18% year-on-year to Rs 414 crore for Q4, and 19% to Rs 1,484 crore for FY26.

Net interest income growth and margin indicators

Net interest income (NII) increased 21% year-on-year to Rs 387 crore in Q4FY26, up from Rs 320 crore in Q4FY25. For the full year FY26, NII grew 20% year-on-year to around Rs 1,376-1,377 crore, as reported in the results summary and earnings call. Management also indicated that net interest margins improved to 9.4% in FY26, and that the shift in business mix over five years expanded NIM from 5.6% to 9.4%. The company also cited a cost of funds of 8.5% for FY26, and an incremental cost of funds for Q4 of about 8.6%, down from 9.3% in the same period last year.

AUM growth and mix shift toward direct-to-customer

Lending assets under management (AUM) rose 22% year-on-year to Rs 16,594 crore as of March 31, 2026. Management said AUM also grew about 10% quarter-on-quarter, and noted that growth was led by expansion in the direct-to-customer business. The direct-to-customer contribution was stated at about 59% of total AUM in FY26, up from 19% in FY21. The earnings call also reported that direct-to-customer business grew about 39% year-on-year to more than Rs 9,800 crore. Within the AUM mix, the company cited MSME finance at 22%, consumer finance at about 30%, and microfinance at 6%.

Asset quality and credit cost improvement

The quarter showed a meaningful reduction in credit costs. Credit cost fell to 2.2% in Q4FY26 compared with 6% in Q4FY25, and the results summary also described the decline as 383 basis points year-on-year. For FY26, credit cost was reported at 2.8%, down 42 basis points year-on-year, and management also referenced an improvement from 3.2% in FY25 to 2.8% in FY26. On asset quality, gross NPA ratio was 1.2% and net NPA ratio was 0.6% as of March 31, 2026. A line in the input referenced provisioning coverage ratio on stage III assets, but the percentage figure was not provided.

FY26 profitability and return ratios

Northern Arc Capital’s management called FY2026 a “landmark year” and highlighted record performance despite headwinds in microfinance earlier in the year and geopolitical uncertainties toward year-end. Full-year profit after tax (PAT) was reported at Rs 406 crore, up 33% year-on-year. The quarter delivered the highest ever quarterly profit, described as about Rs 133 crore. Return on assets (RoA) improved to 3.3% in Q4FY26 and 2.8% for FY26, based on the headline performance table shared in the disclosure summary. Return on equity (RoE) was reported at 11.1% for FY26 and 14% for Q4. Tangible net worth stood at Rs 3,896 crore, up 13% year-on-year, as per the earnings call.

Other disclosures: IPO proceeds and filings

Northern Arc Capital also disclosed that there was no deviation in the utilisation of IPO proceeds for the quarter ended March 31, 2026. The company raised INR 4,498.45 million in the public issue on September 23, 2024, which is about Rs 449.85 crore. CRISIL Ratings Limited was named as the monitoring agency for the IPO proceeds. The utilisation statement was shared with BSE and NSE, and the disclosure was filed by Prakash Chandra Panda, Company Secretary and Compliance Officer, pursuant to Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Key numbers snapshot

Why the results mattered to investors

The combination of higher earnings and lower credit costs shaped the market response. NII growth indicated that the core lending franchise continued to expand, while the drop in credit cost suggested lower stress in the portfolio compared to the year-ago quarter. Management linked the performance to disciplined underwriting, improved collection efficiency, and cautious growth and expansion. The reported AUM mix shift toward direct-to-customer lending also mattered because management connected it to stronger margins over time. Separately, the confirmation of no deviation in IPO proceeds utilisation reduces uncertainty around capital deployment in the eyes of public market investors.

Conclusion

Northern Arc Capital’s Q4FY26 print showed a sharp year-on-year jump in profit to about Rs 133 crore, supported by higher revenue, NII growth, and a steep decline in credit costs. AUM rose to Rs 16,594 crore as of March 31, 2026, while asset quality indicators stood at 1.2% gross NPA and 0.6% net NPA. The company has already completed its board-approved audited results process and held an earnings call on May 8, 2026, with the recording hosted on its website. Investors will likely track how credit costs and asset quality behave as the company builds on its FY26 base and business mix shift.