ARCIL IPO: Why analysts are mixed on ₹733-crore offer; GMP at 21%

Asset Reconstruction Company (India) IPO: The initial public offer (IPO) of Asset Reconstruction Company (India) or ARCIL has garnered a mixed response from analysts. The ₹733-crore IPO opened for bidding today, September 9, and will remain open until Friday, September 11. The offer is entirely a stake sale by existing shareholders, and therefore no proceeds will be received by the company. 

 

Asset Reconstruction IPO price band is set at ₹132 to ₹139 per share. Investors can apply for one lot of 107 shares and its multiples thereof. 

 

ARCIL would become the first listed ARC in India. The company acquires stressed assets of banks and financial institutions and implements resolution strategies through restructuring, enforcement of rights on underlying securities, and settlement aimed at maximizing recovery. 

 

 

As of FY26, ARICL was India's second-largest ARC with an AUM of Rs 20,150 crore. Its AUM comprises corporate (~69 per cent of AUM), retail (~23 per cent) and SME loans (~8 per cent).

 

In the grey market, ARCIL IPO shares traded at ₹169 apiece, up 21.58 per cent over the upper end of the price band.  

Should you bid for ARCIL IPO?   

Here's what brokerages recommended on the offer:

 

Swastika

Swastika has a 'neutral' rating on ARCIL IPO as it said that the 100 per cent OFS structure limits near-term capital expansion. However, it added that the company's reasonable P/E valuation (~11x FY26) and high profitability make it a solid choice for long-term investors seeking financial sector diversification. 

 

SBI Securities

SBI Securities said that it believes the business is lumpy in nature and isn’t a steady compounding financial service business. ARC profitability is a function of multiple factors like stressed asset acquisition, resolution timeframe, recovery rate, economic conditions, etc. 

 

"Hence, we assign a NEUTRAL rating to the issue. We would like to track the company’s performance post-listing for a few quarters," it added. 

Anand Rathi

On the valuation front, based on FY26 earnings, the company is seeking a P/E of 11x times, and a post-issue market capitalization of approximately ₹45,161 million, making the issue appears to be reasonably priced, said Anand Rathi. 

 

"The company’s earnings remain sensitive to AUM composition and asset sourcing, with investment income contributing 46.5% of FY26 revenue and the top 5 sellers accounting for 67.2% of acquisitions, while declining collections and 34.9% of AUM ageing beyond 8 years could weigh on recoveries, cash flows and profitability," said the brokerage.

 

However, its expertise in acquiring stressed assets, supported by a diversified resolution strategy and robust collections framework, strengthens its ability to maximize recoveries and unlock value from distressed assets, Anand Rathi analysts added. "Hence, we assign a Subscribe for Long Term rating for the issue."

 

Ventura

The brokerage has a 'Subscribe' tag as it said that resolution platform is supported by capabilities across credit evaluation, asset management, restructuring, legal recovery and insolvency resolution. Its institutional shareholder base includes Avenue India Resurgence Pte. Ltd. and State Bank of India as promoters.

 

It added that the company utilises multiple resolution avenues including the Insolvency and Bankruptcy Code (IBC), SARFAESI proceedings, negotiated settlements and other recovery mechanisms to maximise value from acquired stressed assets.

  

 

ARCIL IPO subscription status

ARCIL IPO was booked just 15 per cent as of 12.30 PM, as it garnered bids for 5.5 million shares as against 36.91 million shares on offer. The retail portion was subscribed 25 per cent and the non-institutional investor (NII) quota 11 per cent. The qualified institutional buyer (QIB) segment did not receive any bids so far. 

Disclaimer: Views and outlook shared belong to the respective brokerages/analysts and are not endorsed by Business Standard. Readers' discretion is advised.