Northern ARC Capital Ltd is Rated Hold

Rating Overview and Context

On 05 May 2025, MarketsMOJO revised Northern ARC Capital Ltd’s rating from 'Sell' to 'Hold', reflecting a significant improvement in the company’s overall profile. The Mojo Score increased by 22 points, moving from 45 to 67, signalling a more balanced risk-reward profile for investors. This 'Hold' rating suggests that while the stock is not currently a strong buy, it offers reasonable value and stability, making it suitable for investors seeking moderate exposure to the Non-Banking Financial Company (NBFC) sector.

Here’s How Northern ARC Capital Ltd Looks Today

As of 12 February 2026, Northern ARC Capital Ltd demonstrates a blend of solid fundamentals and attractive valuation metrics that underpin its current 'Hold' status. The company’s market capitalisation remains in the smallcap segment, and it operates within the NBFC sector, which continues to show resilience amid evolving economic conditions.

Quality Assessment

The company holds an average quality grade, reflecting steady operational performance and consistent growth. Northern ARC Capital Ltd has exhibited strong long-term fundamental strength, with a compound annual growth rate (CAGR) of 38.10% in net sales. This robust sales growth highlights the company’s ability to expand its business effectively over time. Additionally, the latest quarterly results for December 2025 reveal record net sales of ₹721.14 crores and a profit before tax (excluding other income) of ₹131.52 crores, which has grown by 53.8% compared to the previous four-quarter average. The profit before depreciation, interest, and tax (PBDIT) also reached a high of ₹366.90 crores, underscoring operational efficiency.

Valuation Perspective

Northern ARC Capital Ltd’s valuation is currently very attractive, with a price-to-book value of just 1.1. This low valuation multiple relative to its return on equity (ROE) of 7.8% suggests that the stock is reasonably priced, offering potential upside if the company continues to deliver on its growth trajectory. Investors may find this valuation appealing, especially when compared to peers in the NBFC sector, where valuations can often be stretched due to market optimism.

Financial Trend Analysis

The company’s financial trend remains positive, supported by strong sales growth and improving profitability. Over the past year, Northern ARC Capital Ltd has delivered a remarkable 39.73% return to shareholders, significantly outperforming the broader market benchmark, the BSE500, which returned 13.00% over the same period. Profits have increased by 22% in the last year, reflecting effective cost management and operational leverage. Institutional investors have also shown growing confidence, increasing their stake by 0.96% in the previous quarter to hold a collective 15.99% of the company’s shares. This increased participation by well-informed investors often signals a favourable outlook on the company’s fundamentals.

Technical Outlook

The technical grade for Northern ARC Capital Ltd is mildly bullish, indicating a cautiously optimistic market sentiment. Despite some short-term price fluctuations, the stock has demonstrated resilience, with a six-month gain of 10.45% and a year-to-date increase of 2.03%. The one-day and one-week changes are modestly negative at -0.35% and -0.72% respectively, while the one-month and three-month returns show slight declines of -1.85% and -6.06%. These movements suggest some consolidation but do not detract from the overall positive technical momentum.

What the 'Hold' Rating Means for Investors

For investors, the 'Hold' rating on Northern ARC Capital Ltd implies that the stock is fairly valued at present, with balanced risk and reward characteristics. It is neither a compelling buy nor a sell candidate, but rather a stock to monitor for steady performance and potential future opportunities. The rating reflects a combination of average quality, very attractive valuation, positive financial trends, and mild technical strength. Investors seeking exposure to the NBFC sector with moderate risk tolerance may consider maintaining their positions while watching for further developments in the company’s operational and market performance.

Sector and Market Positioning

Northern ARC Capital Ltd operates in the NBFC sector, which plays a crucial role in India’s financial ecosystem by providing credit and financial services outside traditional banking channels. The company’s strong sales growth and improving profitability position it well within this competitive landscape. Its market-beating performance over the past year highlights its ability to generate shareholder value despite sectoral challenges. The combination of institutional investor interest and solid fundamentals suggests that Northern ARC Capital Ltd is well placed to navigate future market conditions.

Investment Considerations and Outlook

Investors should consider Northern ARC Capital Ltd’s current 'Hold' rating as an indication of a stable investment with moderate growth prospects. The company’s strong sales growth and improving profitability provide a solid foundation, while its attractive valuation offers a margin of safety. However, the average quality grade and mild technical signals suggest that investors should remain vigilant to market developments and sector dynamics. Monitoring institutional investor activity and quarterly financial results will be key to assessing whether the stock’s rating might shift in the future.

Summary

In summary, Northern ARC Capital Ltd’s 'Hold' rating by MarketsMOJO, last updated on 05 May 2025, reflects a balanced view of the company’s prospects. As of 12 February 2026, the stock exhibits strong long-term sales growth, very attractive valuation, positive financial trends, and mild technical strength. This combination makes it a suitable holding for investors seeking exposure to the NBFC sector with a moderate risk appetite. While not a strong buy, the stock’s market-beating returns and institutional support highlight its potential as a steady performer in the current market environment.

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