Northern Arc Capital shares jump after DAM Capital projects another 36% upside

Shares of Northern ARC Capital Ltd. gained over 5% on Monday, September 15, after brokerage firm DAM Capital initiated coverage on the stock with a ‘Buy’ rating and a price target of ₹335.The price target ascribed by DAM Capital, implies a potential upside of nearly 36% from Friday’s closing levels.

Northern ARC Capital shares are trading at an attractive valuation, equivalent to 0.9 times the estimated book value for the financial year 2027 and 6.8 times the estimated earnings for the same period.

The brokerage wrote in its note that an increasing share of direct-to-customer lending, coupled with easing interest rate environment would ensure margin expansion.In addition to this, growth in the fund management and placement business is expected to boost fee income, which could further improve RoAs.

DAM Capital also expects asset quality headwinds, particularly in the MFI segment, to also abate from the second half of FY26, with normalcy likely from FY27 onwards.

Taken together, these factors are expected to drive strong earnings growth and improve return ratios. DAM Capital estimates an earnings CAGR of 39% over FY26-FY27e.

Shares of Northern ARC Capital Ltd. closed 0.11% higher at ₹246.46 on Friday. The stock has risen 13% so far in 2025, while over the last 12 months, it has declined nearly 24%.