Asset Reconstruction Co.(India) IPO

Strengths · 8

• 01Profit has grown every year, from Rs 305.34 crore in FY2024 to Rs 355.32 crore in FY2025 and Rs 407.84 crore in FY2026.
• 02Income grew 26% in FY2026, from Rs 623.40 crore to Rs 785.08 crore.
• 03The margin is very high. Profit after tax of Rs 407.84 crore on total income of Rs 785.08 crore is a PAT margin of 57%.
• 04The balance sheet is large, with a net worth of Rs 3,079.39 crore as on 31 March 2026.
• 05It is the first ARC set up in India and has been registered with the RBI since August 2003. An RBI licence is hard to get and keeps new competition out.
• 06The promoters are strong institutions, Avenue India Resurgence Pte. Ltd. and State Bank of India.
• 07It works across corporate, SME and retail loans rather than one segment, and has been building up the retail side.
• 08It has a nationwide setup with 13 offices across 12 states, supported by valuers, collection agents and empanelled lawyers.

Risks · 8

• 01The entire issue is an offer for sale. Not a single rupee comes to the company, and there are no objects of the issue because all the money goes to the selling shareholders.
• 02Borrowing has gone up eight times in two years, from Rs 149.95 crore in FY2024 to Rs 305.93 crore in FY2025 and Rs 1,205.50 crore in FY2026.
• 03The P/E and the return on capital employed are not stated in the data available to us, so the issue cannot be compared with peers on those measures from here.
• 04Return on net worth is only 13.59% even though the PAT margin is 57%, which shows how much capital this business has to keep locked up to earn that profit.
• 05Recovery from stressed loans is lumpy and slow. It depends on court and NCLT timelines and on settlements, none of which the company controls.
• 06The supply of business depends on banks choosing to sell stressed loans. If banks hold on to their bad loans or the credit cycle is clean, there is less to buy.
• 07This is a tightly regulated business. Any RBI change on ARC capital, provisioning or how recoveries are booked would directly change the economics.
• 08Promoter holding will come down from 88.47% to 77.45% after the issue.

Asset Reconstruction Company (India) Limited was started in February 2002. It is an asset reconstruction company, usually shortened to ARC. Its business is to buy loans that borrowers have stopped repaying, called stressed assets, from banks and financial institutions, and then work on recovering as much value as possible from them.

It got its certificate of registration from the Reserve Bank of India in August 2003 to carry on securitisation and asset reconstruction, and it is recognised as the first ARC set up in India.

The company works across three areas, corporate loans, SME and other loans, and retail loans. It buys both single loans and whole portfolios, secured as well as unsecured, and then uses different methods to recover the money, including resolution, restructuring, enforcement of security, settlement and collection, depending on what the underlying asset is. It earns in two ways, through fee income and through income on its own investments. As on 31 March 2026 it worked out of 13 offices across 12 states and had 206 permanent employees, supported by registered valuers, collection agents and empanelled lawyers. Its promoters are Avenue India Resurgence Pte. Ltd. and State Bank of India.

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