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Stocks To Buy: Motilal Oswal 'bull case' projects 75% upside for this underperforming NBFCThe Northern Arc Capital stock trades at 7 times its FY27 P/E (price-to-earnings) estimates, which Motilal considers attractive given the improving business mix and strong earnings visibility.By Meghna Sen  February 24, 2026, 10:55:08 AM IST (Published)2 Min ReadShares of Northern Arc Capital Ltd. gained as much as 3% on Tuesday, February 24, after brokerage firm Motilal Oswal Financial Services initiated coverage on the stock.

The brokerage has assigned a 'Buy' rating with a price target of ₹360 per share, implying an upside potential of 46% from Monday's closing levels.

In its bull case scenario, Motilal Oswal sees the stock rallying as much as 75%.

According to the brokerage, Northern Arc Capital has built a differentiated financial services ecosystem catering to underserved retail credit segments across MSME, consumer and rural markets.

The company's pan-India distribution network and proprietary technology platform support its sourcing, underwriting and collections capabilities.

Motilal said that the company has developed end-to-end in-house capabilities across its core segments, creating an integrated ecosystem for borrowers, originators and investors.

The brokerage said that Northern Arc has structurally transitioned from an IR-led portfolio, which accounted for 81% in FY21, to a higher-yielding D2C mix that now stands at 56%, with a target of 70% over the next 2-3 years.

This shift is expected to improve yields and profitability. Disciplined risk management, backed by field-level oversight, FLDG structures, CGFMU guarantees and stringent partner onboarding, should help keep credit costs under control as rural finance normalises.

Proprietary technology and fee income from fund management and placement activities further diversify revenues, supporting earnings stability and return ratios.

The stock trades at 7 times its FY27E P/E (price-to-earnings), which Motilal Oswal considers attractive given the improving business mix and strong earnings visibility.

The brokerage models an AUM CAGR of 20% and PAT CAGR of 34% over FY26-28E, with RoA and RoE estimated at 3.2% and 15%, respectively, in FY28.

Northern Arc Capital has no promoter shareholding, and all six analysts tracking the stock currently have 'Buy' ratings.

Shares were trading 2.56% higher at ₹252.20. The stock remains below its IPO price of ₹263.Continue ReadingNote To ReadersDisclaimer: The views and investment tips expressed by investment experts on CNBCTV18.com are their own and not that of the website or its management. CNBCTV18.com advises users to check with certified experts before taking any investment decisions.TagsMotilal OswalNorthern Arc Capitalshare market today