The Northern Arc IPO is generating significant excitement as it prepares for its market debut tomorrow, September 24, 2024. The price band for the IPO has been set between ₹249 and ₹263 per share.
This article explores the key details surrounding the IPO, the trends in grey market premium (GMP), and the implications for investors looking to invest in IPOs.
Impressive GMP trends
The grey market premium for Northern Arc shares has been a focal point for investors. Following the allotment of shares, the GMP has surged to around ₹144 against the IPO issue price of ₹263, translating to a strong GMP of approximately 54.75%. This premium hints at substantial potential listing gains for those looking to invest in IPOs.
Despite a drop of ₹34 from the previous GMP of ₹178 recorded on September 16, the current GMP reflects an upward trend, being ₹16 higher than the ₹128 quoted on September 19, 2024, when the issue closed for subscription. These fluctuations indicate a healthy interest in the shares, suggesting a possible listing price of around ₹407 apiece on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) tomorrow. Consequently, investors can anticipate listing gains of nearly 55% from the Northern Arc Capital shares.
Subscription response
According to NSE data, the response from Qualified Institutional Buyers (QIBs) was particularly strong. The highest bid was 240.79 times, while Non-Institutional Investors subscribed 142.41 times, and Retail Individual Investors (RIIs) subscribed 31.08 times.
This robust subscription reflects the market's confidence in Northern Arc, making it an appealing option for investors eager to invest in IPOs. The IPO consists of 19,011,407 fresh issue shares and 10,532,320 shares for sale, with a face value of ₹10 each.
Utilisation of proceeds
Northern Arc Capital plans to utilise the net proceeds from the IPO to meet its future capital requirements, focusing on onward lending in various sectors, including micro, small, and medium enterprises (MSMEs), microfinance institutions (MFIs), consumer finance, vehicle finance, affordable housing finance, and agricultural finance. The company is also committed to ensuring compliance with the Reserve Bank of India (RBI) regulations on capital adequacy for the Financial Year 2025.
As a diversified financial services platform, Northern Arc operates with the mission of catering to the diverse retail credit needs of underserved households and businesses in India. Registered with the RBI as a Non-Banking Finance Company, Northern Arc has built a solid reputation over its 14 years of operation.
What does this mean for potential investors?
For those considering investing in IPOs, the Northern Arc offering presents a compelling opportunity. The impressive GMP trends and overwhelming subscription rates suggest that market sentiment is strong. Investors looking to invest in IPOs should be aware of the potential for significant listing gains based on the current GMP.
Moreover, the company's focus on financial inclusion aligns with broader market trends, further enhancing its attractiveness to investors. Northern Arc's commitment to serving underserved sectors positions it well for future growth, making it a noteworthy consideration for those wishing to invest in IPOs.
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