Introduction
A strong brand, scale, and improving asset quality make Tata Capital compelling for long‑term investors in Indian NBFCs. However, the valuations are not cheap versus peers and early signals for a listing pop look muted (low grey‑market premium, moderate Day‑1 subscription). If you want steady compounding with Tata parentage, a measured application makes sense. If you want listing gains, temper expectations.
The offer—key facts at a glance
Issue size: ~₹15,511–15,512 crore (largest NBFC IPO this year). Structure: mix of fresh issue (~21 cr shares) to augment Tier‑I capital and OFS (~26.58 cr shares) by Tata Sons and IFC. Total on offer: ~47.58 cr shares. The Financial Express
Price band: ₹310–₹326 per share; lot size: 46 shares (min). Bidding window: Oct 6–8, 2025. Anchor: Oct 3. Expected listing: around Oct 13 (per newsroom estimates). mint+1
Anchors: Raised ~₹4,641–4,642 crore; LIC emerged the largest buyer in the anchor book. The Times of India+1
Valuation guidepost: At the upper band, media estimate market cap ~₹1.32–1.38 lakh crore. The Times of India
Why list now? RBI requires NBFC‑Upper Layer entities to list by Sep 2025; fresh capital also boosts Tier‑I for onward lending. CARE Ratings
Note: Grey‑market chatter (GMP) has hovered ~3–4%—useful for sentiment but not a reliable listing predictor. The Economic Times+2The Economic Times+2
What does Tata Capital do?
Tata Capital (subsidiary of Tata Sons) is among India’s largest diversified NBFCs, spanning consumer loans, SME/MSME, housing, vehicle finance, corporate & infrastructure finance, and allied services. As of June 30, 2025, the company reported AUM/loan book ~₹2.33 lakh crore, a wide omni‑channel network of ~1,516 branches across 27 states/UTs, and a granular book (98%+ accounts below ₹1 crore). Management has also consolidated group financing by merging Tata Motors Finance Ltd (TMFL) into Tata Capital (effective May 8, 2025; appointed date Apr 1, 2024), issuing ~18.4 cr shares to TMF Holdings (~4.7% stake). ICICI Direct
Ratings & funding: Domestic ratings AAA/Stable, and BBB‑ internationally; average cost of borrowings ~7.8% in FY25 with diversified sources (banks, NCDs, CPs, ECB, securitisation). ICICI Direct
Financial snapshot (FY23–FY25 & Q1 FY26)
From the DRHP‑based broker compendium (ICICI Direct), consolidated trends are:
Interest earned: ₹11,911 cr (FY23) → ₹16,366 cr (FY24) → ₹25,720 cr (FY25).
Net interest income (NII): ₹5,310 cr → ₹6,798 cr → ₹10,690 cr.
Operating profit (PPP): ₹4,364 cr → ₹4,996 cr → ₹7,748 cr.
Net profit (PAT): ₹2,946 cr → ₹3,327 cr → ₹3,655 cr.
RoA: ~1.8% (FY25); RoE: ~12.6% (FY25).
Asset quality: GNPA ~1.9%, NNPA ~0.8% (FY25).
Unsecured loans: ~21% of loans (FY25), down from 24.5% (FY24).
Provision coverage ratio (PCR): down to ~58.5% (FY25) from 77.1% (FY23).
Average cost of borrowings: ~7.8% (FY25). ICICI Direct
A separate summary covering FY25 also cites revenue from operations ~₹25,720 cr and PAT ~₹3,655 cr, broadly aligning with the above. Upstox – Online Stock and Share Trading
Takeaways: Scale is rising fast (helped by the TMFL merger), margins are lower than high‑yield NBFC peers (given Tata Capital’s more diversified, partly secured mix), asset quality is disciplined, but the decline in PCR bears watching.
How is it priced vs peers?
Using FY25 snapshots compiled by ICICI Direct from RHP data:
| Metric (FY25) | Tata Capital | Bajaj Finance | HDB Financial | L&T Finance |
|---|---|---|---|---|
| AUM / Gross loans (₹ cr) | ~2,26,553–2,33,363 | 4,14,830 | 1,06,880 | 97,760 |
| NIM (%) | ~5.2 | 9.9 | 7.8 | 9.9 |
| RoA (%) | ~1.8 | 4.5 | 2.3 | 3.0 |
| RoE (%) | ~12.6 | 19.2 | 14.7 | 10.8 |
| GNPA (%) | ~1.9 | 1.0 | 2.3 | 3.3 |
| P/B (x) | ~4.0 (at ₹326) | 6.4 | 3.8 | 2.4 |
Why this IPO matters (and where the money goes)
Regulatory timeline: As an NBFC‑Upper Layer, Tata Capital must list by Sep 2025; the IPO ensures compliance. CARE Ratings
Use of proceeds (fresh issue): Augment Tier‑I capital to support growth and onward lending (OFS proceeds go to selling shareholders). The Financial Express+1
Anchor confidence: ~₹4,641–4,642 cr raised; LIC the largest buyer—helpful to establish book quality and price discovery. Reuters+1
What could go right (positives)
- Tata parentage, AAA (domestic) ratings, and diversified funding—supports low cost of capital and steady access to liabilities. CARE Ratings+1
- Scale & distribution: ~1,516 branches across 27 states/UTs; wide product bouquet (consumer, housing, vehicle, SME/corporate). ICICI Direct
- Granularity & secured mix: Highly granular accounts; ~80% secured aids resilience through cycles. ICICI Direct
- Asset quality discipline: GNPA ~1.9%, NNPA ~0.8% (FY25); still conservative for a rapidly‑growing NBFC of this size. ICICI Direct
- Group consolidation (TMFL merger) increases cross‑sell opportunities across retail and CV/auto ecosystems. ICICI Direct
Should retail investors apply?
Apply if you:
- Prefer quality + brand + scale with disciplined asset quality and are comfortable with mid‑teens RoE compounding prospects.
- Want exposure to India’s retail & MSME credit cycle via a diversified NBFC, backed by Tata Sons and AAA domestic ratings.
Consider waiting / smaller allocation if you:
- Seek listing‑day gains (signals are mixed/soft).
- Prefer higher‑RoE/higher‑NIM plays (e.g., Bajaj Finance), or lower‑valuation names for mean reversion.
Practical approach: If you like the long‑term story but worry about debut volatility, you can apply modestly in IPO and plan to add on dips post‑listing if fundamentals stay intact. (Standard risk disclaimer: This is educational analysis, not investment advice.)
Bidding runs Oct 6–8, 2025. Price band: ₹310–₹326. Lot size: 46 shares and multiples thereof.
~₹15,511–15,512 cr; ~21 cr fresh shares + ~26.58 cr OFS by Tata Sons and IFC, totaling ~47.58 cr shares. Fresh issue proceeds bolster Tier‑I; OFS proceeds go to sellers
Tata Capital raised ~₹4,641–4,642 cr from anchors; LIC was the largest buyer.
The RHP/newsroom schedules mention standard categories (QIB, NII, Retail, Employee); no separate shareholder quota has been announced.
To augment Tier‑I capital and support future lending/growth; the listing also meets RBI’s NBFC‑UL requirement.
FY25 (consolidated) shows NII ~₹10,690 cr, PAT ~₹3,655 cr, RoA ~1.8%, RoE ~12.6%, GNPA ~1.9%; AUM ~₹2.33 lakh cr (Jun 30, 2025).
Lower PCR (~58.5%), unsecured loan mix (~20–21%), and NIM sensitivity to rates. Near‑term listing sentiment looks tepid (low GMP).
At ~4.0× book (upper band), Tata Capital is cheaper than Bajaj Finance (6.4×) but richer than L&T Finance (2.4×) and roughly around HDB (3.8×)—with correspondingly lower RoE than Bajaj.
