Northern Arc Capital Ltd. stock has surged over 2% in trade on Tuesday after Motilal Oswal initiated coverage on the counter, offering a bullish outlook while assigning a target price that implies an upside of over 40% from current levels.
In its latest report, MOSL has initiated coverage on Northern Arc Capital with a 'buy' rating and a target price of Rs 360, implying a 46% upside from Monday's closing price. Buoyed by the positive initiation, the stock is currently trading at Rs 250.1, accounting for gains of around 1.5%.
The bullish call from MOSL on Northern Arc Capital stems from multiple factors, including its balanced business model with earnings stability. The brokerage has pointed out that the non-banking financial company is building a scalable, tech-driven credit ecosystem.
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MOSL added that D2C transition, diversified fee income and risk management are key positive trends being seen in Northern Arc Capital, and these are factors that could aid the company's return on asset expansion.
D2C business now accounts of 56% of Northern Arc Capital's lending asset under management vs 19% in FY21.
MOSL adds that the risk framework anchored in proprietary analytics, disciplined underwriting, and portfolio diversification has consistently delivered resilient asset quality
Shares of Northern Arc Capital currently trade at 0.9 times its estimated FY27 price to book value, which is seen as attractive by MOSL, which models an AUM/PAT CAGR of 20% and 34% over the FY26 to FY28 period.
Overall, a strategic shift to the D2C business, a balanced business model, a robust risk architecture and an attractive valuation make MOSL bullish on Northern Arc Capital.
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