ARCs' Recovery Rate to Hit 90% Next Fiscal, Driven by Stressed Asset Resolution

• Asset Reconstruction Companies (ARCs) are projected to achieve a 90% cumulative recovery rate for security receipts (SRs) in the upcoming fiscal year, a 700 basis point increase.
• Higher recoveries will be primarily driven by strong performance and resolution of large stressed assets in key infrastructure sectors like real estate, roads, and power.
• A slowdown in new acquisitions due to limited supply of fresh distressed assets from banks and NBFCs will also contribute to the improved recovery ratio.
• ARCs' assets under management (AUM) have declined by 4% since fiscal 2024 as redemptions outpaced acquisitions, a trend expected to continue.
• Corporate assets lead recoveries (92% of expected recoveries), with retail asset pools also seeing an increase to 80-85% next fiscal.