As of March 2023, Arohan reported a GLP of ₹5,357 crore, achieving a strong three-year CAGR of 68%. Backed by reputed institutional investors such as the Michael & Susan Dell Foundation and Aavishkaar, the company also initiated its IPO plans in 2023, indicating its next phase of growth.

Why Consider Arohan Financial Services Unlisted Shares?

Investing in Arohan’s unlisted shares provides exposure to India’s expanding microfinance sector. Key strengths include:

Strong Market Position: Ranked among the top NBFC-MFIs in India with a dominant footprint in Eastern regions.
High Growth Momentum: Loan portfolio grew at a 68% CAGR between 2020 and 2023, reaching ₹6,616 crore in advances by 2024.
Improving Asset Quality: Gross NPA declined significantly from 11.23% in 2021 to 1.64% in 2024, while Net NPA dropped to near zero.
IPO Opportunity: Filing of DRHP in 2023 enhances the likelihood of future liquidity and valuation upside for investors.

However, investors should also be mindful of risks such as reliance on borrowings, relatively lower profit margins, and geographic concentration.

Business Segments Driving Growth

1. Microfinance Lending (Core Business)
Provides income-generating loans primarily to women in rural and semi-urban regions, with 97% of borrowers being women.

2. MSME Lending
Extends credit to small businesses through a focused branch network across multiple states.

3. Financial Inclusion Services
Offers complementary products like insurance and savings solutions alongside lending services.

Financial Highlights (2021–2024)
Revenue Recovery: Interest income increased from ₹858 crore in 2022 to ₹1,380 crore in 2024, marking a 61% rise.
Profit Turnaround: Transitioned from a loss of ₹160 crore in 2021 to a profit of ₹314 crore in 2024.
NPA Improvement: Gross NPA reduced by 85%, while Net NPA reached 0%, reflecting strong credit discipline.
Loan Book Expansion: Advances grew from ₹3,925 crore in 2021 to ₹6,616 crore in 2024, a 68% increase.
Balance Sheet Strength: Reserves increased by 83%, supporting financial stability with a P/B ratio of 1.72x.
Valuation Metrics: Unlisted shares priced around ₹155 (2024), trading at ~25x P/E and 1.72x P/B.
Key Considerations for Investors

Arohan’s unlisted shares are attractive for investors looking to benefit from financial inclusion growth in India. Important factors include:

IPO Potential: A successful listing could unlock value and improve liquidity.
Asset Quality: Sustained low NPAs strengthen investor confidence.
Rural Focus: Strong presence in underbanked regions aligns with long-term inclusion trends.
Risks to Watch
Debt Dependence: High borrowing levels (₹5,617 crore in 2024) may impact financial flexibility.
Regulatory Environment: Strict compliance with RBI guidelines for NBFC-MFIs is essential.
Economic Sensitivity: Exposure to low-income borrowers makes the business vulnerable to income disruptions.
Share Price Outlook

The price of Arohan’s unlisted shares largely depends on:

Progress toward IPO listing
Overall sentiment in the microfinance sector
Company’s ability to maintain growth and asset quality

Since these shares trade in the private market, pricing is influenced by demand-supply dynamics, investor perception, and long-term growth visibility.

Conclusion

Arohan Financial Services operates at the core of India’s financial inclusion journey. Its strong growth, improving asset quality, and IPO prospects make it an interesting unlisted investment opportunity. However, investors should take a balanced approach by considering both growth potential and associated risks before investing.

Disclaimer

This analysis is based on publicly available information. Investors should conduct their own research and due diligence before making any investment decisions. No responsibility is assumed for financial losses or inaccuracies.

Pros
Leading NBFC-MFI with strong presence in Eastern India
Rapid loan book growth with 68% CAGR
Significant improvement in asset quality with near-zero NPAs
Cons
High dependence on borrowings
Moderate profitability margins
Regional concentration increases risk exposure