Asset Reconstruction Co.(India)
FinMinutes Deep Business Model & Edge
Asset Reconstruction Company (India) Limited is India's premier asset reconstruction company engaged in acquiring stressed assets from banks and financial institutions and implementing resolution strategies through restructuring, enforcement of securities, and settlements. Operating across corporate loans, SME and other loans, and retail loans, the company manages assets through special purpose trusts set up under the SARFAESI Act across India.
What this company actually does — full breakdown ▾
Asset Reconstruction Company (India) Limited (ARCIL) is a pioneer in the Indian asset reconstruction industry, operating as an RBI-registered Asset Reconstruction Company (ARC) under the SARFAESI Act. The company acquires stressed assets including non-performing assets (NPAs), special mention accounts (SMA 0/1/2), and written-off accounts from commercial banks, non-banking financial companies (NBFCs), housing finance companies (HFCs), and other financial institutions. ARCIL structures acquisitions through special purpose trusts that issue Security Receipts (SRs) to Qualified Buyers and seller institutions. Its business operates across three core verticals: Corporate Loans, SME and Other Loans, and Retail Loans. Resolution strategies encompass debt restructuring, negotiated settlements, enforcement of underlying security interests under SARFAESI, Debt Recovery Tribunal (DRT) proceedings, and corporate insolvency resolution processes under the Insolvency and Bankruptcy Code (IBC). As of March 31, 2026, ARCIL's Assets Under Management (AUM) stood at ₹ 20,149.99 Crore (₹ 201,499.87 million). Since inception, ARCIL has acquired total principal debt of ₹ 89,909.34 Crore (₹ 899,093.41 million) at a total acquisition cost of ₹ 44,114.43 Crore (₹ 441,144.32 million) and achieved cumulative recoveries of ₹ 31,914.78 Crore (₹ 319,147.75 million). Geographically, ARCIL operates nationwide through 13 offices located across 12 states, supported by an operational network of 206 employees, 218 registered valuers, 206 collection agents, and 988 empanelled lawyers.
- Corporate Loans — Acquisition and resolution of single-credit corporate exposures and corporate portfolios. Employs IBC, SARFAESI, DRT, and restructuring mechanisms. Outstanding AUM of ₹ 13,852.76 Crore (68.75% of total AUM) as of March 31, 2026.
- Retail Loans — Acquisition and resolution of retail loan portfolios, including housing, LAP, mortgage, gold, vehicle, and unsecured loans. Utilizes specialized in-house and third-party collection agents. Outstanding AUM of ₹ 4,744.76 Crore (23.55% of total AUM) as of March 31, 2026.
- SME and Other Loans — Acquisition and resolution of Small and Medium Enterprise (SME) loans, commercial portfolios, and co-resolution of overdue accounts. Outstanding AUM of ₹ 1,552.47 Crore (7.70% of total AUM) as of March 31, 2026.
ARCIL is India's first incorporated ARC (established in 2002) with over two decades of operating history, holding the second-largest AUM share (12.6% as of March 31, 2025) and net worth in the Indian ARC industry. It maintains strong institutional sponsorship from Avenue Capital Group (via Avenue India Resurgence Pte. Ltd holding 69.73%) and State Bank of India (holding 19.95%). Its Net Owned Funds exceed regulatory thresholds, enabling it to act as a resolution applicant under IBC (one of only five ARCs meeting this criteria as of March 31, 2025) and maintain the lowest debt-to-equity ratio (0.41x) and borrowing costs among top private peers.
The Offer
Follow the Money — Use of Proceeds
- The objects of the Offer are to achieve the benefits of listing the Equity Shares on the Stock Exchanges and for the Offer for Sale of up to 52,731,946 Equity Shares of face value of ₹10 each aggregating up to ₹[●] million by the Selling Shareholders. Our Company will not receive any proceeds from the Offer.
Valuation at the Offer Price
The filing does not print a single headline multiple, so this one is ours: the upper band divided by the latest restated earnings per share — the same arithmetic the “Basis for the Offer Price” section performs. It is struck on pre-issue earnings, so the post-issue figure will differ once the fresh capital is deployed. The peer group is the one the filing itself names. A premium is not the same thing as expensive and a discount is not the same thing as cheap — the peer table and the reasons sit further down this page.
FinMinutes IPO Score — How It's Built
Transparent, deterministic, computed from the filing — not an opinion. Open any component below to see exactly what it measures and what it is worth. Components with no disclosed input are dropped from the weighting entirely rather than held at an invented neutral, because a constant inside a weighted average is not neutral — it quietly drags every score toward the middle. Weighted across 5 live components.
90% of the designed weighting had real data behind it on this issue. Not yet scored here: Valuation Vs Peers. A lower coverage figure does not mean a worse company — it means we are standing behind less of the picture, and you should read the findings below rather than the headline number.
How this is measured12%
Whether fresh capital actually enters the business. A predominantly offer-for-sale issue is marked down ONLY when the financials are weak. A profitable, cash-rich company selling down is treated as neutral, not penalised, because it does not need the money.
How this is measured12%
What changed between the draft prospectus and the final one. A period roll-forward or a refreshed industry report is expected and scores neutral. A statutory auditor replaced mid-process, a prior year restated, an offer-for-sale expanded late, new statutory dues disclosed, or a risk factor quietly removed all score against. Where only one of the two documents has been read, this component is dropped from the weighting rather than guessed.
How this is measured32%
Driven by the models battery run on the filing's own restated numbers: the Piotroski fundamental tests (scored out of those we could actually run), the Altman Z-double-prime solvency zone, and the direction of profit across the disclosed period. It is not a single yes/no on last year's profit.
How this is measured6%
A proxy for syndicate strength, based today only on how many lead managers are on the issue: 75 where three or more banks are involved, 60 otherwise. We have not built a bank-by-bank track record, so treat this as a rough signal. When the filing does not disclose the syndicate, this component is dropped from the weighting rather than guessed.
How this is measured28%
Starts at 100 and loses points for every material finding: 12 for a flagged finding, 4 for a noted one. Two kinds feed it. DERIVED findings are computed from the filed numbers against stated thresholds — operating cash negative while profit is positive, related-party revenue above 15% of total, revenue rising while profit falls, goodwill above 30% of net worth, receivables growing more than 1.3x faster than sales, cash below half of short-term debt. Those are reproducible: the same filing gives the same answer every time, and the rule is printed beside the finding. READ findings come from the forensic sweep of the notes. Contingent liabilities, related-party intensity, customer concentration, litigation, auditor qualifications, statutory dues, promoter funding. Findings that record the ABSENCE of a problem — no litigation pending, an unmodified audit opinion — deduct nothing. This is the component our forensic read drives directly, and it moves most between companies.
3-Year Financial & Growth Trend
| Metric | FY26 | FY25 | FY24 |
|---|---|---|---|
| Revenue (₹ Cr) | 721.692 | 581.757 | 605.824 |
| Net Profit (₹ Cr) | 351.688 | 329.508 | 330.465 |
| PAT Margin | 48.73% | 56.64% | 54.55% |
Revenue Breakdown
- Fees and Other Income: 32.64%
- Other Operating Income: 28.41%
- Net Gain on Fair Value Changes - Unrealised: 26.89%
- Recovery of Security Receipts, Unrealized Fee & Expenses (written off earlier): 9.13%
- Interest Income: 2.93%
Market Context
NOT part of the FinMinutes ScoreThe Score above is what the filing says. Everything in this box is what the crowd says. We keep them apart on purpose — every other site blends the two and calls the result a rating. Demand is real information, but it is information about the market, not about the company, and it changes by the hour while the company does not.
Demand and our read of the filing are broadly in the same territory.
Subscription is low early in a book and high at the end, because most bids arrive in the final hours. A number read on day one says more about the clock than the company — which is precisely why it is not in the Score. GMP is unofficial, unregulated, and easily moved. Neither is a recommendation.
Why the numbers moved, in management’s own words
Taken from the Management’s Discussion and Analysis section of the filing. A number tells you what happened; this is the company’s explanation of why, and whether it calls the cause temporary or structural.
| Metric | Move | Management's stated reason | Type |
|---|---|---|---|
| Total Income (FY26 vs FY25) | ↑ 23.4% | Total income increased primarily due to an increase in revenue from operations driven by higher management fees, portfolio recovery fees, and unrealised fair value gains. | Structural |
| Revenue from Operations (FY26 vs FY25) | ↑ 24.1% | Revenue from operations grew as fees and other income increased significantly alongside higher net unrealised gains on fair value changes of security receipts. | Structural |
| Fees and Other Income (FY26 vs FY25) | ↑ 84.6% | Fees and other income expanded substantially due to higher management/trusteeship fees and increased portfolio recovery fees earned from managed trusts. | Structural |
| Finance Costs (FY26 vs FY25) | ↑ 189.7% | Finance costs increased due to higher interest on borrowings resulting from expanded term loan drawdowns and credit limit utilization to fund fresh asset acquisitions. | Structural |
| Write off of Security Receipts, Unrealized Fee and Expenses (FY26 vs FY25) | ↑ 136.5% | Write-offs increased due to a higher volume of outstanding investments in security receipts reaching the maximum regulatory resolution period of eight years under RBI guidelines. | Regulatory |
| Other Expenses (FY26 vs FY25) | ↑ 46.2% | Other expenses rose primarily on account of higher legal costs incurred for recovery litigation, increased professional charges for deal due diligence, and higher marketing expenses. | Structural |
| Impairment of Financial Instruments/ Financial Assets (FY26 vs FY25) | ↑ 103.0% | Impairment expenses increased due to higher expected credit loss provisioning on outstanding fees and expenses recoverable from trusts under management. | Cyclical |
| Depreciation, Amortization and Impairment (FY26 vs FY25) | ↑ 40.5% | Depreciation and amortization increased primarily due to higher amortization charges on intangible assets, specifically software platforms. | Structural |
| Recovery of Security Receipts, Unrealized Fee and Expenses (written off earlier) (FY26 vs FY25) | ↓ 34.1% | Recoveries against previously written-off assets declined as fewer older accounts realized recoveries during the year compared to Fiscal 2025. | One-off |
| Net Cash Generated from Operating Activities (FY26 vs FY25) | ↓ 31.6% | Operating cash flows decreased due to higher working capital deployment into trade receivables and increased direct tax payments during the year. | Cyclical |
| Finance Costs (FY25 vs FY24) | ↑ 69.6% | Finance costs increased due to higher interest on borrowings following the availing of a term loan and increased utilization of credit facilities. | Structural |
| Recovery of Security Receipts, Unrealized Fee and Expenses (written off earlier) (FY25 vs FY24) | ↓ 65.2% | Recoveries declined significantly as Fiscal 2024 included exceptionally large one-off recoveries from previously written-off investments. | One-off |
| Impairment of Financial Instruments/ Financial Assets (FY25 vs FY24) | ↑ 46.5% | Impairment expenses increased due to higher expected credit loss provisioning on fees and expenses recoverable from trusts. | Cyclical |
| Other Income (FY25 vs FY24) | ↑ 611.7% | Other income surged due to interest received on income tax refunds pertaining to prior assessment years. | One-off |
| Net Cash Generated from Operating Activities (FY25 vs FY24) | ↓ 48.5% | Operating cash flow decreased as Fiscal 2024 had benefited from higher cash realisations from written-off investments. | One-off |
Headwinds
- Decline in traditional corporate NPA supply sector persistent
Falling corporate NPA levels force ARCs to rely more on granular retail and SME stressed assets, which have lower implied recovery rates and require greater technology/collection infrastructure. - Legal delays and procedural friction under IBC and DRT sector persistent
Resolution timelines under IBC frequently exceed the statutory 330-day limit, causing NPV erosion of recoveries and escalating legal expenses. - Competition from Government-backed NARCL sector persistent
NARCL focuses on large corporate stressed assets above ₹500.00 Crore with government-backed SRs, intensifying competition for high-value corporate acquisitions. - Seasonality in recovery cash flows company temporary
Business activity and asset acquisitions concentrate heavily in the fourth quarter as banks clean balance sheets, leading to quarterly earnings fluctuations.
Tailwinds
- RBI Expected Credit Loss (ECL) framework effective April 2027 sector
Steep increases in provisioning floor for Stage 2 early-stress assets will incentivize banks to proactively sell SMA-stage loans to ARCs ahead of transition. - Regulatory authorization to acquire SMA-0/1/2 accounts sector
Permission to acquire early-stage stressed assets enables proactive restructuring before loan quality deteriorates further, enhancing recovery potential. - Reduction of TDS on Security Receipts from 30% to 10% sector
Lower TDS rates enhance net cash distributions to institutional investors, boosting investor interest in security receipts issued by ARC trusts.
Applying, and Who Handles the Allotment
Check allotment status on the registrar’s own portal → We link the registrar directly rather than mirroring the form.
Deep Financials
Revenue, EBITDA and profit are what every listing site prints. Below are the full restated statements as disclosed, the ratios we compute from them, and a DuPont decomposition of the return on equity. A prospectus carries three years, not ten — that is the document’s ceiling, and within it we go as deep as it allows.
Income StatementThe profit and loss as filed, then what we derive from it — kept apart.
Statutory order, exactly as restated in the filing. Finance cost and depreciation sit inside Total Expenses under Ind AS, which is why they are listed among the expense lines here rather than below the total. The expense rows sum to the total. Rows the filing does not disclose separately are omitted rather than left blank.
| Income Statement — as filed (₹ Cr) | FY26 | FY25 | FY24 |
|---|---|---|---|
| Revenue from Operations | 721.69 | 581.76 | 605.82 |
| Other Income | 28.22 | 26.08 | 3.67 |
| Total Income | 749.92 | 607.84 | 609.49 |
| Employee Benefit Expense | 63.59 | 60.94 | 55.66 |
| Finance Cost | 36.18 | 12.49 | 7.37 |
| Depreciation & Amortisation | 3.02 | 2.15 | 1.93 |
| Other Expenses | 182.55 | 101.09 | 129.79 |
| Total Expenses | 285.34 | 176.68 | 194.75 |
| Profit Before Exceptional Items and Tax | 464.57 | 431.16 | 414.74 |
| Share of Profit of Associates / JV | -7.20 | 0.89 | 3.17 |
| Profit Before Tax | 464.57 | 431.16 | 414.74 |
| Tax Expense | 141.88 | 121.92 | 103.85 |
| Profit After Tax | 351.69 | 329.51 | 330.47 |
| Other Comprehensive Income | 0.39 | -1.30 | -1.35 |
| Total Comprehensive Income | 352.08 | 328.21 | 329.11 |
| EPS - Basic | 10.82 | 10.14 | 10.17 |
| EPS - Diluted | 10.82 | 10.14 | 10.17 |
Balance SheetWhat the company owns, owes, and is worth on paper.
| Balance Sheet (₹ Cr) | FY26 | FY25 | FY24 |
|---|---|---|---|
| Share Capital | 324.90 | 324.90 | 324.90 |
| Reserves & Surplus | 3,456.32 | 3,093.11 | 2,751.24 |
| Net Worth | 2,955.21 | 2,663.14 | 2,426.51 |
| Long-term Borrowings | 522.45 | 100.00 | 50.00 |
| Short-term Borrowings | 683.05 | 205.93 | 99.95 |
| Total Borrowings | 1,205.50 | 305.93 | 149.95 |
| Trade Payables | 0.02 | 1.85 | 1.42 |
| Current Liabilities | 2,276.26 | 1,610.52 | 1,168.32 |
| Total Liabilities | 2,771.18 | 1,732.84 | 1,230.18 |
| Property, Plant & Equipment | 36.74 | 35.46 | 37.00 |
| Intangible Assets | 3.53 | 3.75 | 0.32 |
| Investments | 1,535.32 | 1,121.60 | 913.76 |
| Trade Receivables | 105.96 | 53.88 | 62.31 |
| Cash & Equivalents | 158.16 | 183.25 | 359.26 |
| Current Assets | 5,514.83 | 4,208.50 | 3,352.42 |
| Total Assets | 5,726.40 | 4,395.99 | 3,656.69 |
Cash FlowWhere the cash actually went. Often the most honest statement of the three.
| Cash Flow (₹ Cr) | FY26 | FY25 | FY24 |
|---|---|---|---|
| Net Cash from Operating Activities | 193.83 | 283.47 | 550.72 |
| Capital Expenditure | 1.80 | 1.55 | 4.40 |
| Net Cash from Investing Activities | -985.18 | -553.66 | -380.60 |
| Net Cash from Financing Activities | 766.26 | 94.17 | -55.13 |
| Net Change in Cash | -25.09 | -176.01 | 114.99 |
Ratio AnalysisProfitability, leverage, liquidity, efficiency and earnings quality — computed by us.
Every ratio below is computed by us from the line items the company disclosed — not copied from anywhere. The arithmetic is standard; the point is that somebody actually did it. Blank cells mean the filing did not disclose the inputs, and we would rather show a gap than invent a number.
| Ratio | FY26 | FY25 | FY24 |
|---|---|---|---|
| Profitability | |||
| EBITDA Margin (%) | 68.1 | 73.2 | 69.1 |
| EBIT Margin (%) | 67.7 | 72.8 | 68.7 |
| PAT Margin (%) | 48.7 | 56.6 | 54.5 |
| Return on Equity (%) | 11.9 | 12.4 | 13.6 |
| Return on Capital Employed (%) | 12.2 | 14.9 | 16.3 |
| Return on Assets (%) | 6.1 | 7.5 | 9 |
| Leverage | |||
| Debt / Equity (x) | 0.41 | 0.11 | 0.06 |
| Net Debt / EBITDA (x) | 2.05 | 0.28 | -0.5 |
| Interest Coverage (x) | 14.04 | 35.44 | 56.87 |
| Liquidity | |||
| Current Ratio (x) | 2.42 | 2.61 | 2.87 |
| Efficiency | |||
| Asset Turnover (x) | 0.13 | 0.13 | 0.17 |
| Receivable Days | 54 | 34 | 38 |
| Payable Days | 0 | 1 | 1 |
| Quality of Earnings | |||
| Operating Cash Flow / PAT (x) | 0.55 | 0.86 | 1.67 |
| Accruals Ratio (%) | 2.8 | 1 | -6 |
| Capex / Depreciation (x) | 0.6 | 0.72 | 2.28 |
DuPont DecompositionWhy the return on equity is what it is: margin, efficiency, or leverage.
A headline return on equity tells you what. The DuPont decomposition tells you why — whether the return is earned through margin, through asset efficiency, or simply through leverage. Two companies can post an identical ROE for opposite reasons, and only one of them is safe.
| Component | FY26 | FY25 | FY24 |
|---|---|---|---|
| Net Margin (PAT / Revenue) | 48.7% | 56.6% | 54.5% |
| Asset Turnover (Revenue / Assets) | 0.13x | 0.13x | 0.17x |
| Equity Multiplier (Assets / Net Worth) | 1.94x | 1.65x | 1.51x |
| = Return on Equity | 11.9% | 12.4% | 13.6% |
| Tax Burden (PAT / PBT) | 0.76x | 0.76x | 0.8x |
| Interest Burden (PBT / EBIT) | 0.91x | 0.97x | 0.99x |
| Operating Margin (EBIT / Revenue) | 70.4% | 76.1% | 69.2% |
Computed from the disclosed statements. Where the filing omits an input, the row is left blank rather than estimated.
Quality of EarningsWhat the statements say when you read them against each other.
What the statements say once you read them against each other. These are observations, not verdicts — every one is arithmetic on the numbers the company itself disclosed, and each is stated so you can go and check it in the filing.
- Interest coverage was 14.04x in FY26. Debt servicing is comfortably covered by operating profit.
Forensic ModelsBeneish, Altman and Piotroski — plus our own final-year check.
Beneish M-Score
7 of 8 inputsAn eight-variable model built to detect earnings manipulation, and built to run on exactly two consecutive years — which is what a prospectus gives us. It belongs here more than anywhere: a company about to list has the maximum possible incentive to have dressed up the very years it is about to show you. A score above −1.78 is the threshold at which the model says the accounts merit a closer look. It is a screening signal, not an accusation, and it was calibrated on listed companies elsewhere. Read the eight components, not just the total.
| Component | Value | What it captures |
|---|---|---|
| DSRI Days Sales in Receivables Index (Receivables_t / Sales_t) / (Receivables_t-1 / Sales_t-1) | 1.585 | Above 1 means receivables grew faster than sales. Revenue may be being recognised ahead of collection. |
| GMI Gross Margin Index GrossMargin_t-1 / GrossMargin_t | — | Above 1 means margins deteriorated. A firm with worsening prospects has more incentive to manipulate. |
| AQI Asset Quality Index AQ_t / AQ_t-1, where AQ = 1 - (CurrentAssets + PPE) / TotalAssets | 0.883 | Above 1 means a rising share of assets is soft (neither current nor fixed) — capitalised costs can hide here. |
| SGI Sales Growth Index Sales_t / Sales_t-1 | 1.241 | Growth is not manipulation. But high-growth firms face more pressure to keep the streak going. |
| DEPI Depreciation Index DepRate_t-1 / DepRate_t, where DepRate = Dep / (Dep + PPE) | 0.753 | Above 1 means assets are being depreciated more slowly — a quiet way to lift reported profit. |
| SGAI SG&A Index (SGA_t / Sales_t) / (SGA_t-1 / Sales_t-1), SGA proxied as employee cost + other expenses | 1.224 | A proxy, because filings rarely break out SG&A cleanly. Read it as a direction, not a precise figure. |
| LVGI Leverage Index Leverage_t / Leverage_t-1, where Leverage = (CurrentLiab + LongTermDebt) / TotalAssets | 1.256 | Above 1 means leverage rose. Debt covenants create pressure to hit numbers. |
| TATA Total Accruals to Total Assets (PAT - CashFromOperations) / TotalAssets | 0.0276 | The gap between reported profit and cash generated. The single heaviest term in the model — and the one that catches profit that never became cash. |
The filing does not disclose every input the model needs, so we withhold the composite score rather than substitute a guess. The components we could compute are above.
Altman Z″-Score (emerging markets)
Z″ = 10.64 · SafeA distress-prediction model. We use the Z″ variant deliberately: the original Z was calibrated on American manufacturers and misleads badly on Indian services companies. Above 2.6 is the safe zone, 1.1 to 2.6 is grey, below 1.1 is the distress zone. Like every model of its kind it is a screen, not a prophecy.
| X1 — Working Capital / Total Assets | 0.566 |
| X2 — Retained Earnings / Total Assets | 0.604 |
| X3 — EBIT / Total Assets | 0.089 |
| X4 — Net Worth / Total Liabilities | 1.066 |
| Z″ = 3.25 + 6.56·X1 + 3.26·X2 + 6.72·X3 + 1.05·X4 | 10.64 |
Piotroski F-Score (adapted)
2 / 8Nine yes-or-no tests of fundamental strength — except we run eight. One of the original nine asks whether the company issued new shares, which is plainly absurd to ask of a company whose entire purpose at this moment is to issue shares. We drop that test and score out of eight, and we would rather tell you that than quietly fudge it.
- ✓Positive return on assets
- ✓Positive operating cash flow
- ✗Return on assets improving
- ✗Cash flow exceeds profit (quality of earnings)
- ✗Long-term leverage decreasing
- ✗Current ratio improving
- —Gross margin improving
- ✗Asset turnover improving
Ratios Nobody Prints
- Contingent liabilities / Net worth: 0.1%
Contingent liabilities of 2.00 cr against a net worth of 2,955.21 cr — 0.1% of what the company is worth on paper. These are obligations that sit off the balance sheet but could land on it. What they consist of matters as much as the size: a corporate guarantee to a subsidiary is a different animal from a disputed tax demand, and the filing says which. - Related-party revenue / Total revenue: 22.2%
22.2% of revenue in FY26 came from entities connected to the promoters. Revenue you sell to yourself is not the same as revenue you won in the market. - Cash / Short-term borrowings: 0.23x
Short-term borrowings of 683.05 cr against cash of 158.16 cr. Debt that must be refinanced within a year is only comfortable while lenders stay comfortable. - Promoter remuneration / PAT: 2%
Managerial remuneration to the promoter group was 6.89 cr against a profit of 351.69 cr. This is a legitimate cost — but it is also a route by which value leaves a company before it ever reaches a minority shareholder.
The Formula NotebookEvery number above, with the working shown. Check us.
Every number we publish, with the working shown. The formula, the same formula with this company’s actual figures put into it, the answer, and what it is for. Check us. That is the point.
PAT ÷ Net Worth351.69 ÷ 2,955.21What the company earned on the money shareholders have in it. The headline measure of return — and the one the DuPont section takes apart.
EBIT ÷ (Net Worth + Total Borrowings)507.96 ÷ (2,955.21 + 1,205.50) = 507.96 ÷ 4,160.71Return on ALL the capital in the business, borrowed as well as owned. Unlike ROE, it cannot be flattered by taking on debt.
EBITDA ÷ Revenue510.98 ÷ 721.69Operating profitability before the effects of debt, tax and depreciation. What the business earns from the act of trading.
Total Borrowings ÷ Net Worth1,205.50 ÷ 2,955.21How much the company has borrowed against what it owns. High is not automatically bad — ask whether the borrowing is being serviced comfortably.
EBIT ÷ Finance Cost507.96 ÷ 36.18How many times over operating profit covers the interest bill. Below about 2x, a meaningful share of what the business earns is going to lenders rather than owners.
(Trade Receivables ÷ Revenue) × 365(105.96 ÷ 721.69) × 365How long the company waits to be paid. Rising receivable days mean revenue is being booked faster than it is collected — which is where a great many accounting problems begin.
Cash from Operations ÷ PAT193.83 ÷ 351.69Did the profit turn into cash? Profit is an opinion; cash is a fact. When this sits well below 1x for long, the two are drifting apart, and the filing is where you find out why.
(PAT − Cash from Operations) ÷ Total Assets(351.69 − 193.83) ÷ 5,726.40 = 157.86 ÷ 5,726.40The share of reported profit that exists on paper rather than in the bank. It is also the heaviest single term in the Beneish model, for good reason.
Price × Post-issue Shares₹139.00 × 324,897,140 sharesWhat the whole company is being valued at, if the issue prices at the top of the band.
Market Cap + Total Borrowings − Cash4,516.07 + 1,205.50 − 158.16What it would actually cost to buy the whole business: you take on its debt and you get its cash. This is the number a buyer cares about, and it is the reason a P/E on its own can mislead.
Enterprise Value ÷ EBITDA5,563.41 ÷ 510.98The multiple that includes debt. Two companies on the same P/E — one debt-free, one heavily borrowed — are not the same investment, and only this number tells you so.
Market Cap ÷ PAT4,516.07 ÷ 351.69The familiar multiple. Useful, but blind to debt — read it alongside EV/EBITDA, never instead of it.
EBIT × (1 − tax rate) ÷ (Net Worth + Debt − Cash)NOPAT ÷ Invested CapitalWhat the business earns on the capital actually at work in it. We do not compare this to a cost of capital: that would need a beta, an unlisted company has none, and inventing one would be theatre.
P/E ÷ trailing PAT growth (%)12.84 ÷ 6.7%PEG was designed for FORWARD growth. This one uses TRAILING growth, because that is all a prospectus gives us — and the final year before an IPO is very often the best year the company will have for a while. A low PEG here may say more about the timing of the filing than about the price. We show it because it was asked for; we show the growth denominator beside it so it cannot mislead you quietly.
Workspace
The numbers are already loaded. Move the offer price and watch every multiple move with it. Set your own growth and margin and see what they imply two years out. These are your assumptions, not our forecast — we have no view on what this company will earn, and the moment we published one we would be doing something we are not registered to do. What we can do is put the arithmetic in front of you and get out of the way.
Price defaults to the top of the band. Margin defaults to what the company actually reported in FY26.
Projections are arithmetic on the inputs you typed. They are not a forecast, not a recommendation, and not a view on whether this offer is worth taking. Educational only.
Institutional Alpha: DRHP Deep Dive
The Indian Asset Reconstruction Company (ARC) industry originated under the SARFAESI Act, 2002 to resolve non-performing assets (NPAs) and clean bank balance sheets. As of March 31, 2025, the Indian ARC market size in terms of AUM reached ₹ 134,161.00 Crore (₹ 1,341,610.00 million), represented by 27 operational ARCs. The industry is highly concentrated, with the top seven ARCs accounting for approximately 74% of total market AUM. Growth is supported by evolving regulatory frameworks, including RBI's Expected Credit Loss (ECL) provisioning rules, Securitisation of Stressed Assets Framework (SSAF), and rising Net Owned Fund requirements (₹ 300.00 Crore). As India's first incorporated ARC and second-largest player by AUM, ARCIL is uniquely positioned to capture distressed asset flows from banks, NBFCs, and MSME sectors.
Future Planning
ARCIL plans to scale up its retail and SME recovery verticals by expanding its field agent collection network, leveraging AI/ML digital collection platforms ('Collection as a Service'), and engaging with NBFC-MFIs and Small Finance Banks for co-resolution of micro-distressed assets.
Source: p.171, 201Competitive Position
ARCIL holds the second-largest market share (12.6%) in the Indian ARC industry with an AUM of ₹ 20,149.99 Crore as of March 31, 2026. It is one of only five ARCs meeting the ₹ 300 Crore Net Owned Fund criteria to act as a Resolution Applicant under IBC.
Source: p.105, 119Execution Track Record
Since inception in 2002, ARCIL has acquired total principal debt of ₹ 89,909.34 Crore at an acquisition cost of ₹ 44,114.43 Crore and achieved cumulative recoveries of ₹ 31,914.78 Crore across corporate, retail, and SME portfolios.
Source: p.171Shareholding, Syndicate & Leadership
Leadership & Skin in the Game
Leadership: Phanindranath Kakarla
Litigation: Pending litigation against the Company includes 1 indirect tax proceeding involving ₹ 56.10 Crore (service tax demand of ₹ 561.03 million) and 5 criminal proceedings involving ₹ 0.00 Crore (unquantifiable). Pending litigation against Promoters includes 295 direct tax proceedings involving ₹ 89,076.22 Crore and 229 indirect tax proceedings involving ₹ 10,301.28 Crore against State Bank of India, 2 civil proceedings involving ₹ 99,377.49 Crore against SBI, and 8,875 criminal proceedings involving ₹ 525.09 Crore against SBI. Pending litigation by Trusts/Subsidiaries includes 74 material civil recovery proceedings involving ₹ 18,010.66 Crore.
Auditor / RPT Flags: The examination reports on Restated Financial Information by M S K A & Associates LLP and K S Aiyar & Co contained no qualifications or emphasis of matter. Internal auditors noted open observations including lack of Aadhaar masking, delay in tracking SARFAESI proceedings, operational issues in CIC wilful defaulter data submission, and absence of formal business continuity framework.
Lending Vitals
The operating metrics that actually price this business — the ones a generic IPO page skips. Straight from the filing.
| Metric | Value | Detail |
|---|---|---|
| Total Assets Under Management (AUM) | ₹20,149.99 Crore | Up 19.57% from ₹16,852.57 Crore in FY25 |
| Capital Adequacy Ratio (CRAR) | 65.31% | FY26 vs 88.41% in FY25 |
| Net Owned Funds | ₹2,576.87 Crore | FY26 vs ₹2,509.65 Crore in FY25 |
| Debt to Equity Ratio | 0.41x | FY26 vs 0.11x in FY25 |
| Return on Average Equity (ROAE) | 12.52% | FY26 vs 12.95% in FY25 |
| Return on Average Total Assets (ROA) | 6.95% | FY26 vs 8.18% in FY25 |
| Average Cost of Borrowings | 8.90% | FY26 vs 9.91% in FY25 |
| Cumulative SR Redemption Ratio | 50.78% | FY26 vs 51.79% in FY25 |
| Total Acquisitions for the year | ₹5,958.80 Crore | Up 49.87% from ₹3,975.87 Crore in FY25 |
| Total Collections / Recoveries | ₹3,484.39 Crore | FY26 vs ₹3,882.66 Crore in FY25 |
Source: p.105, 200, 216, 312 — Business / MD&A
🔍 Forensic Findings — What the Footnotes Say
Findings from across the filing — the notes, MD&A, related-party disclosures, contingent liabilities, CARO and litigation, alongside the risk section itself. Each carries where it was found, so you can see which were buried and which were disclosed. Findings marked derived are computed from the filed numbers against a stated rule, shown beside them.
The company faces show cause notices from DGCEI and Service Tax Commissionerate demanding ₹ 56.10 Crore (₹ 561.03 million) in service tax on management incentives/upside income for the period May 2008 to June 2017. The company deposited ₹ 56.10 Crore under protest to freeze interest liability and recognized ₹ 13.07 Crore (₹ 130.65 million) as interest income in FY26 from term deposits held on behalf of trusts.
p.37, 432Internal auditors identified several open operational and compliance control deficiencies across the last three Fiscals, including lack of Aadhaar masking, delays in SARFAESI tracking, errors in CIC wilful defaulter reporting, absence of a formal business continuity framework, and unintegrated e-auction applications.
p.37The IPO is structured entirely as an Offer for Sale of up to 52,731,946 Equity Shares by Promoters (Avenue India Resurgence Pte. Ltd and State Bank of India), resulting in zero proceeds accruing to the company to fund business growth or capital needs.
p.2, 103Pending litigation against the Company includes 1 indirect tax proceeding involving ₹ 56.10 Crore (service tax demand of ₹ 561.03 million) and 5 criminal proceedings involving ₹ 0.00 Crore (unquantifiable). Pending litigation against Promoters includes 295 direct tax proceedings involving ₹ 89,076.22 Crore and 229 indirect tax proceedings involving ₹ 10,301.28 Crore against State Bank of India, 2 civil proceedings involving ₹ 99,377.49 Crore against SBI, and 8,875 criminal proceedings involving ₹ 525.09 Crore against SBI. Pending litigation by Trusts/Subsidiaries includes 74 material civil recovery proceedings involving ₹ 18,010.66 Crore.
p. 37, 61, 221, 238 and 2 moreThe examination reports on Restated Financial Information by M S K A & Associates LLP and K S Aiyar & Co contained no qualifications or emphasis of matter. Internal auditors noted open observations including lack of Aadhaar masking, delay in tracking SARFAESI proceedings, operational issues in CIC wilful defaulter data submission, and absence of formal business continuity framework.
p. 37, 61, 221, 238 and 2 more22.2% of FY26 revenue (₹160.07 cr) came from entities connected to the promoters. Revenue sold to yourself is not revenue won in the market.
rule: RPT revenue > 15%Revenue grew, the related-party share of it grew, and operating cash flow fell, all in FY26. No one of these is evidence on its own. Together they are the pattern worth understanding before the other numbers on this page.
rule: sales↑ + RPT share↑ + CFO↓Trade receivables grew 96.7% against revenue growth of 24.1% in FY26. Revenue may be being recognised ahead of collection.
rule: receivables growth > 1.3x sales growthShort-term borrowings of ₹683.05 cr against cash of ₹158.16 cr. Debt that must be refinanced within a year is comfortable only while lenders stay comfortable.
rule: cash < 0.5x short-term debtCompany's Claims vs Reality
We stress-test each claim against the filing's own data.
While ARCIL holds the second-largest AUM share (12.6% in FY25) and Net Owned Funds of ₹ 2,895.88 Crore well above the ₹ 300 Crore regulatory threshold, AUM growth faces competitive pressure from government-backed NARCL for large corporate loans and rising write-offs of older Security Receipts exceeding 8 years.
p.105, 119, 171Proprietary SWOT — Company-Specific
Strengths
- First incorporated ARC in India with over two decades of track record and second-largest AUM share (12.6% as of March 31, 2025).
- Strong institutional sponsorship from Avenue Capital Group (69.73%) and State Bank of India (19.95%).
- High capital adequacy with Net Owned Funds of ₹ 2,895.88 Crore and low leverage (0.41x debt-to-equity ratio).
Weaknesses
- High dependency on fourth-quarter resolution recoveries causing seasonality in quarterly cash flows and revenues.
- Prolonged resolution timelines under IBC and DRT exceeding 270/330 days leading to NPV erosion of stressed asset recoveries.
Opportunities
- RBI's proposed Expected Credit Loss (ECL) framework effective April 2027 incentivizing banks to offload Stage 2/SMA accounts early.
- Regulatory permission to acquire SMA-0/1/2 accounts allowing early-stage intervention before default.
- Reduction in TDS rate on Security Receipts from 30% to 10% improving cash flows to institutional SR investors.
Threats (material, not boilerplate)
- Intense competition from government-backed NARCL for large corporate stressed assets above ₹ 500 Crore. risk_section
Why it matters: NARCL's government-guaranteed SRs give it a competitive advantage in bidding for mega-distressed corporate debt. - Regulatory changes raising Net Owned Fund requirements or imposing stricter provisioning rules on Security Receipts. risk_section
Why it matters: Stricter RBI norms could increase capital lock-in and force higher write-offs of unredeemed Security Receipts.
Live Subscription Status
Allotment Status
Check your allotment on the registrar's portal → Registrar: MUFG Intime India
Allotment is decided by the registrar, not by us and not by the exchange. In an oversubscribed retail book, allotment is by lottery, so a large application does not improve your odds beyond one lot. If money stays blocked after the refund date, the mandate expiry (23 Oct 2026) is the date to raise with your bank.
Analyst Q&A: Burning Questions
Facts from the filing. No recommendation — that layer arrives once our Research Analyst registration is live.
Why is the IPO structured entirely as an Offer for Sale without any fresh issue proceeds for the company?
The Offer is a 100% Offer for Sale of 52,731,946 Equity Shares by Promoters Avenue India Resurgence Pte. Ltd and State Bank of India to achieve listing benefits and provide liquidity. ARCIL's strong Net Owned Funds of ₹ 2,895.88 Crore and low debt-to-equity ratio (0.41x) provide sufficient balance sheet capital for asset acquisitions without requiring fresh primary capital.
p.2, 103, 105How concentrated is ARCIL's Assets Under Management across business verticals?
As of March 31, 2026, Corporate Loans represent 68.75% (₹ 13,852.76 Crore) of total AUM, Retail Loans account for 23.55% (₹ 4,744.76 Crore), and SME & Other Loans make up 7.70% (₹ 1,552.47 Crore). Corporate loans remain the primary AUM driver, though retail and SME acquisitions are expanding rapidly.
p.171What drove the 24.05% growth in Revenue from Operations in Fiscal 2026?
Revenue from operations increased to ₹ 721.69 Crore in FY26 from ₹ 581.76 Crore in FY25, driven by higher management and trusteeship fee income from managed trusts, increased recovery incentive fees, and higher net unrealised gains on fair value changes of Security Receipts.
p.252, 398What is the status of the ₹ 56.10 Crore service tax litigation and its financial impact?
DGCEI and Service Tax authorities issued notices demanding ₹ 56.10 Crore in service tax on management upside incentives for May 2008 to June 2017. ARCIL deposited ₹ 56.10 Crore 'under protest' to freeze interest liabilities while appealing before CESTAT. No provision has been made on the balance sheet as legal counsel expects the demand to be quashed.
p.37, 432What Earlier Investors Paid
Early capital takes real risk and is fairly rewarded for it — a large multiple built over many years is normal. What deserves a closer look is a steep step-up in a short window: a round priced cheaply only months before the offer.
| Shareholder | Priced at | When | vs IPO price |
|---|---|---|---|
| Subscribers to Memorandum of Association | ₹10.00 | 2002-02-27 | 13.9x |
| An early round from roughly 25 years ago, at roughly 13.9x the offer price. A multiple of that size built over that long reflects the risk taken and the time elapsed. That is the normal reward for early capital, not a red flag. | |||
| ICICI Bank, SBI, IDBI, HDFC, HDFC Bank, IDBI Bank, Federal Bank, South Indian Bank, Jyotin Mehta | ₹10.00 | 2003-05-02 | 13.9x |
| An early round from roughly 24 years ago, at roughly 13.9x the offer price. A multiple of that size built over that long reflects the risk taken and the time elapsed. That is the normal reward for early capital, not a red flag. | |||
| ICICI Bank, SBI, IDBI, Punjab National Bank, Karnataka Bank, Karur Vyasa Bank, Citicorp Finance, Federal Bank, South Indian Bank | ₹10.00 | 2004-10-15 | 13.9x |
| An early round from roughly 22 years ago, at roughly 13.9x the offer price. A multiple of that size built over that long reflects the risk taken and the time elapsed. That is the normal reward for early capital, not a red flag. | |||
| Existing Shareholders (Rights issue 12:10) | ₹30.00 | 2006-11-22 | 4.6x |
| An early round from roughly 20 years ago, at roughly 4.6x the offer price. A multiple of that size built over that long reflects the risk taken and the time elapsed. That is the normal reward for early capital, not a red flag. | |||
| Existing Shareholders (Rights issue 42:100) | ₹70.00 | 2008-06-02 | 2.0x |
| Existing Shareholders (Rights issue 42:100) | ₹70.00 | 2008-12-05 | 2.0x |
| Lathe Investment Pte. Ltd. | ₹84.00 | 2008-12-05 | 1.7x |
Prices are as stated in the filing’s allotment history and are not adjusted for later bonus issues or share splits. Where a company has issued bonus shares, the multiples above understate the true return and can even read as losses. Adjusting for that is on our list; until it is done we would rather show the raw disclosure and tell you its limits than publish a confident number that is wrong.
Lock-in Expiry Calendar
Shares held before the IPO cannot be sold immediately; they unlock in tranches. When a tranche unlocks, more shares become eligible to trade. Retail investors are frequently caught unaware by these dates. The schedule below follows from the listing date; quantities are shown only where the filing discloses them.
- 16 Mar 2028Minimum Promoters' Contribution18 months
- 16 Mar 2027Promoters' excess shareholding6 months
- 16 Mar 2027Other pre-Offer Equity share capital6 months
- 15 Dec 2026Anchor Investors (50%)90 days
- 16 Oct 2026Anchor Investors (remaining 50%)30 days
An unlock means more shares may be sold — not that they will be, and not that the price will move. We state the dates; what you do with them is your call.
What Changed Between the DRHP and the RHP
Companies file a draft prospectus, then a final one. The changes in between are rarely reported, and they can be revealing.
| Item | In the DRHP | In the RHP / Addendum |
|---|---|---|
| Reporting Period The reporting period was rolled forward by one fiscal year to incorporate the financial results for Fiscal 2026, removing Fiscal 2023 from the comparative period. | Three financial years ended March 31, 2025, March 31, 2024, and March 31, 2023 | Three financial years ended March 31, 2026, March 31, 2025, and March 31, 2024 |
| Offer for Sale The total size of the Offer for Sale was reduced by 52,731,946 Equity Shares (a 50.00% reduction). Avenue India Resurgence reduced its OFS by 43,915,124 shares, State Bank of India reduced its OFS by 8,481,938 shares, and Federal Bank reduced its OFS by 334,884 shares, while Lathe Investment maintained its OFS size at 16,244,858 shares. | Offer for Sale of up to 105,463,892 Equity Shares by 4 selling shareholders (Avenue India Resurgence Pte. Ltd.: 68,739,034 shares; State Bank of India: 19,445,000 shares; Lathe Investment Pte. Ltd.: 16,244,858 shares; The Federal Bank Limited: 1,035,000 shares) | Offer for Sale of up to 52,731,946 Equity Shares by 4 selling shareholders (Avenue India Resurgence Pte. Ltd.: 24,823,910 shares; State Bank of India: 10,963,062 shares; Lathe Investment Pte. Ltd.: 16,244,858 shares; The Federal Bank Limited: 700,116 shares) |
| Restated Financials Restated financial statements were updated to include Fiscal 2026 results. Revenue from operations expanded by 24.05% in FY26 driven by higher management fees and unrealised fair value gains, while net worth grew by 10.97%. | Restated Consolidated Revenue from Operations of ₹581.76 Crore (₹5,817.57 million) and PAT of ₹329.51 Crore (₹3,295.08 million) for Fiscal 2025; Net Worth of ₹2,663.14 Crore (₹26,631.40 million) | Restated Consolidated Revenue from Operations of ₹721.69 Crore (₹7,216.92 million) and PAT of ₹351.69 Crore (₹3,516.88 million) for Fiscal 2026; Net Worth of ₹2,955.21 Crore (₹29,552.14 million) |
| Statutory Auditor The examination reports were re-issued on August 21, 2026, to cover the updated Restated Financial Information for Fiscal 2026, with certification by J. Kala & Associates alongside statutory auditor M S K A & Associates LLP. | Examination reports on Restated Financial Information dated August 1, 2025, issued by M S K A & Associates LLP and K S Aiyar & Co. | Examination reports on Restated Financial Information dated August 21, 2026, issued by M S K A & Associates LLP and J. Kala & Associates |
| Risk Factors Risk disclosures were updated to reflect regulatory changes enacted between DRHP and RHP filings, specifically the RBI consolidation of ARC directions and updated market share metrics. | Included 62 risk factors covering corporate, operational, and regulatory risks as of DRHP date (August 1, 2025) | Risk factors updated to reflect regulatory developments, including the notification of RBI (Asset Reconstruction Companies) Directions, 2025 in November 2025 and updated CRISIL industry benchmarks |
Educational, grounded entirely in the company's filings (DRHP/RHP). Not investment advice. FinMinutes does not provide buy/sell recommendations.