Arc Finance Limited was listed on the BSE in 2016. In the last five years, its stock has given a massive return of around 5000%. Will Arc Finance continue to provide such great returns in the future as well? Let’s explore Arc Finance’s growth potential and the Arc Finance share price target 2025 to 2050 in this article.
About Arc Finance
ARC Finance Ltd., founded as ARC Modellors & Services Limited on March 23, 1982, is a non-banking financial company (NBFC) headquartered in Kolkata, India. On February 19, 1993, the company changed its name to ARC Finance Limited. It is registered with the Reserve Bank of India (RBI) to conduct NBFC activities under Section 45IA of the Reserve Bank of India Act, 1934.
Arc Finance Business Model
- Loan & Investment Business: ARC Finance Limited primarily provides loans and financial assistance to individuals, small businesses, and corporate customers.
- Non-Banking Financial Services (NBFC) Model: As a registered NBFC, ARC Finance raises funds through internal accruals and borrowings, which are then used for credit and investment purposes.
Arc Finance Fundamental Analysis
| Stock Name | Arc Finance Ltd. |
|---|---|
| Market Cap | ₹ 89.8 Cr. |
| 52W High | ₹ 2.91 |
| 52W Low | ₹ 0.81 |
| Stock P/E | 22.4 |
| Book Value | ₹ 1.13 |
| Dividend Yield | 0.00 % |
| ROCE | 8.56 % |
| ROE | 5.36 % |
| Face Value | ₹ 1.00 |
| Industry PE | 37.6 |
| Debt to equity | 0.01 |
| Price to book value | 0.90 |
| PEG Ratio | 0.30 |
| Quick ratio | 1.63 |
| Shareholders | March 2023 | March 2024 | March 2025 |
|---|---|---|---|
| Promoters | 12.02% | 12.02% | 6.97% |
| FIIs | 0.00% | 0.00% | 0.06% |
| Public | 87.98% | 87.97% | 92.97% |
| No. of Shareholders | 82,068 | 1,82,228 | 3,12,636 |
Key Factors Driving Arc Finance Future Growth
- Rising Demand for Microfinance and Financial Inclusion: As the government of India promotes financial inclusion through initiatives such as the Pradhan Mantri Jan Dhan Yojana and digital finance adoption, the demand for credit in underserved rural and semi-urban areas is increasing. ARC Finance, which focuses on micro-lending and small-ticket financial services, is well-positioned to benefit from this structural demand shift.
- Focus on MSME and Rural Lending: The government is focusing more on the MSME and rural lending sectors, which often face challenges due to a lack of access to formal credit. ARC Finance can play an important role in filling this credit gap, particularly in Tier II and Tier III cities.
- Expanding Loan Portfolio and Geographical Presence: ARC Finance is actively working to grow its loan book by entering new markets and increasing penetration in existing ones. This expansion will increase loan growth, improve economies of scale, and strengthen the company’s competitive position.
Pros of Arc Finance
- Strong Sales Growth: Arc Finance has achieved a strong sales growth of 23% CAGR over the last five years.
- Strong Profit Growth: Arc Finance has achieved a strong profit growth of 143% CAGR over the last three years.
- Low P/B Ratio (Undervalued Stock): Arc Finance’s stock is trading at a low Price to Book Value (P/B) ratio of 0.90, which indicates that it is trading below its intrinsic value and may be undervalued.
- Low PE Ratio Compared to Peers: Arc Finance has a PE ratio of 22.4, which is lower than the industry average of 37.6, making it relatively undervalued and potentially a good investment opportunity.
- Low Debt Levels: With a low debt-to-equity ratio of 0.01, Arc Finance has minimum dependency on debt, reducing financial risk and interest expenses.
Cons of Arc Finance
- Low Return on Equity (ROE): Arc Finance’s 5-year average ROE is 1.81%, which indicates inefficient use of shareholder funds to generate profits.
- Low Return on Capital Employed (ROCE): Arc Finance’s 5-year average ROCE is 2.63%, indicating inefficient use of capital to generate profits.
- Low Promoter Holding: Arc Finance promoter holding is 6.97%, which is relatively low. This may indicate low promoter confidence and less control over decision-making, allowing outside investors to have more influence.
Arc Finance Ltd Balance Sheet
| Particulars | March 2023 | March 2024 | March 2025 |
|---|---|---|---|
| Equity Capital | 50.50 | 50.50 | 87.15 |
| Reserves | 1.12 | 0.68 | 11.17 |
| Borrowings | 14.76 | 16.09 | 0.58 |
| Other Liabilities | 4.56 | 4.24 | 1.46 |
| Total Liabilities | 70.94 | 71.51 | 100.36 |
| Fixed Assets | 1.57 | 1.37 | 1.27 |
| CWIP | -0.00 | -0.00 | -0.00 |
| Investments | 0.35 | 0.30 | 2.62 |
| Other Assets | 69.02 | 69.84 | 96.47 |
| Total Assets | 70.94 | 71.51 | 100.36 |
By the end of 2025, the Arc Finance share price is expected to be around ₹1.20 in normal conditions. In a bear market, it might be ₹0.90, and in a bull market, it may go up to ₹1.50.
| Arc Finance Share Price Target 2025 | Rupees (₹) |
|---|---|
| Bear Market | 0.90 |
| Normal Market | 1.20 |
| Bull Market | 1.50 |
In 2026, the Arc Finance share price is expected to be around ₹1.45 in a normal situation. In a bear market, it might be ₹1.10, and in a bull market, it may cross ₹2.0.
| Arc Finance Share Price Target 2026 | Rupees (₹) |
|---|---|
| Bear Market | 1.10 |
| Normal Market | 1.45 |
| Bull Market | 2.0 |
According to our analysis, the Arc Finance share price is expected to be around ₹1.75 in 2027. In a bear market, it might be ₹1.25, and in a bull market, it may cross ₹2.6.
| Arc Finance Share Price Target 2027 | Rupees (₹) |
|---|---|
| Bear Market | 1.25 |
| Normal Market | 1.75 |
| Bull Market | 2.6 |
According to our analysis, the Arc Finance share price may trade near ₹2.1 by 2028; bearish conditions could pull it down to ₹1.4, while a strong bull run might lift it to ₹3.4.
| Arc Finance Share Price Target 2028 | Rupees (₹) |
|---|---|
| Bear Market | 1.4 |
| Normal Market | 2.1 |
| Bull Market | 3.4 |
In a normal situation, the Arc Finance share price is projected to be approximately ₹2.5 in 2029. In a bear market, the value may be as low as ₹1.5, while in a bull market, it may rise to ₹4.5.
| Arc Finance Share Price Target 2029 | Rupees (₹) |
|---|---|
| Bear Market | 1.5 |
| Normal Market | 2.5 |
| Bull Market | 4.5 |
In a normal situation, the Arc Finance share price is projected to be approximately ₹3 in 2030. In a bear market, the value may be as low as ₹1.75, while in a bull market, it may rise to ₹5.
| Arc Finance Share Price Target 2030 | Rupees (₹) |
|---|---|
| Bear Market | 1.75 |
| Normal Market | 3 |
| Bull Market | 5 |
By 2035, the Arc Finance share price is projected to be around ₹5.5 under normal conditions. In adverse markets, the price could fall to ₹3, while favorable conditions might push it up to ₹17.
| Arc Finance Share Price Target 2035 | Rupees (₹) |
|---|---|
| Bear Market | 3 |
| Normal Market | 5.5 |
| Bull Market | 17 |
Under normal conditions, the Arc Finance share price might hit ₹12 by 2040. A bearish trend could lower it to ₹5, whereas a bullish surge could raise it to ₹40.
| Arc Finance Share Price Target 2040 | Rupees (₹) |
|---|---|
| Bear Market | 5 |
| Normal Market | 12 |
| Bull Market | 40 |
In 2050, the Arc Finance share price is expected to be around ₹50 in a normal situation. In a bear market, it might be ₹15, and in a bull market, it may go up to ₹250.
| Arc Finance Share Price Target 2050 | Rupees (₹) |
|---|---|
| Bear Market | 15 |
| Normal Market | 50 |
| Bull Market | 250 |
Disclaimer
This article is for educational purposes only. It is not a stock recommendation and should not be treated as such. Please ask your financial advisor before making any investment decision.
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