Diversified financial services platform Northern Arc Capital Ltd reported a 41% year-on-year increase in its consolidated profit after tax (PAT) to ₹114 crore in the first quarter of FY27, driven by healthy growth in lending assets, higher net interest income and improving asset quality.
The company’s net interest income (NII) rose 32% year-on-year to ₹394 crore during the quarter, while the operating expense ratio remained flat at 3.6%. Fee and other income stood at ₹22 crore.
Credit quality continued to improve, with credit cost declining 44 basis points year-on-year to 2.6%, while return on assets (RoA) improved 29 basis points to 2.7% and return on equity (RoE) increased 220 basis points to 11.5%.
D2C loan book crosses ₹10,000 crore
Northern Arc Capital’s lending assets under management (AUM) grew 26% year-on-year to ₹16,855 crore as of June 30, 2026.
The company’s direct-to-customer (D2C) lending business continued to gain traction, with D2C AUM rising 51% year-on-year to ₹10,766 crore, taking its share in the overall lending portfolio to 64%.
Performing Credit Fund AUM stood at ₹2,988 crore, while the company’s gross transaction volume (GTV) during the quarter reached ₹8,595 crore.
Asset quality improves
The company reported further strengthening of its asset quality, with gross non-performing assets (GNPA) declining 20 basis points year-on-year to 1.0%.
Its capital adequacy ratio remained healthy at 22.7%, while net worth increased 15% year-on-year to ₹4,056 crore.
On a strong note
Northern Arc Capital Managing Director & CEO, Ashish Mehrotra said the company had begun FY27 on a strong note, supported by disciplined execution and continued focus on building a diversified retail lending franchise.
“Q1 FY27 marked a strong start to the year as we continued to execute with discipline and build on the momentum of our long-term strategy. We remain focused on building a granular and diversified retail lending book, with our direct lending (D2C) portfolio crossing the ₹10,000 crore milestone during the quarter,” he said.
Mehrotra added that improving asset quality and credit costs remaining within the company’s guided range reflected prudent underwriting and disciplined portfolio management.
He also noted that Northern Arc Capital received an ‘Outstanding’ ESG Impact Rating from ICRA with a score of 81, highlighting its commitment to responsible and sustainable growth.
Despite monitoring external risks such as geopolitical tensions in West Asia and the possible impact of El Niño on the monsoon, the company remains confident that its diversified business model and calibrated risk management approach will support sustained growth while preserving profitability and portfolio quality.