Synopsis: Backed by the Tata Group, Tata Capital’s IPO (Oct 6–8, 2025) has attracted broad-based ‘Subscribe’ calls from leading brokerages citing strong parentage, diversified lending, improving profitability, and prudent risk controls. The offer comprises a fresh issue for growth capital and an OFS, with listing slated on Oct 13, 2025.
Mumbai: The much-awaited Tata Capital IPO has generated street-wide enthusiasm, with most brokerages recommending “Subscribe”. Analysts highlight the company’s Tata Group pedigree, diversified franchise, and consistent growth as key pillars supporting a long-term investment thesis aligned with India’s credit upcycle.
Tata Capital IPO Snapshot
| Price Band | INR 310 – 326 per share |
| Issue Size | INR 15,511.87 crore (INR 6,846 crore Fresh Issue + INR 8,665.87 crore OFS) |
| Issue Dates | 6 – 8 October 2025 |
| Minimum Lot | 46 shares |
| Listing | BSE & NSE (tentative: 13 October 2025) |
| Post-Issue Mkt Cap (approx.) | INR 1.31 – 1.38 lakh crore |
| Objective | Strengthen Tier-I capital for onward lending & future growth |
| Promoter Holding (post-issue) | ~85.5% (from 95.6%) |
| Retail Quota | 35% of the issue |
Brokerage Recommendations: Broad-Based ‘Subscribe’
- BP Wealth: “Leading diversified NBFC with prudent risk management; robust loan growth, expanding NIMs, and digital transformation.”
- Canara Bank Securities: “Strong parentage and governance; sustainable earnings and improving return ratios.”
- Mehta Equities: “Diversified across retail/SME/corporate; fairly valued for scale and growth—subscribe for long term.”
- Kunvarji Finstock: “Brand leverage + distribution support double-digit growth; NII CAGR 26% (FY23–FY25).”
- Samco Securities: “Phygital powerhouse; loan book CAGR 37% (FY23–FY25); strong execution with promoter support.”
- SMC Global: “Premium brand, diversified book, expanding profitability; improving ROE (12.6% in FY25).”
- Ventura Securities: “Merger with Tata Motors Finance adds scale and access; poised to capture India’s credit growth.”
Why the Street is Bullish
- Robust Financial Track Record: NII INR 10,690 cr (FY25) vs INR 6,798 cr (FY24); PAT INR 3,665 cr (FY25); NIM up to 5.2%; loan book up to INR 2.26 lakh cr (FY25) from INR 1.2 lakh cr (FY23).
- Tata Group Parentage: AAA halo, governance standards, and access to low-cost liabilities supporting growth.
- Diversified Model: Retail now 60%+ of book; balanced SME & corporate portfolios reduce concentration risk.
- Digital-First Execution: AI-driven underwriting, API-led onboarding, and phygital distribution aiding scale and efficiency.
- Prudent Risk Controls: Gross Stage 3 at ~1.9%, Net Stage 3 ~0.8%; PCR ~58.5%; CRAR ~16.9%—healthy guardrails.
- Reasonable Valuation: ~35× FY25 EPS (₹9.3) at upper band—seen as fair versus peers given growth/brand premium.
Common Themes in Brokerage Notes
| Factor | Consensus View |
|---|---|
| Tata Group backing | Stability, credibility, and brand-led distribution |
| Financial growth | Strong NII, PAT, improving ROE trajectory |
| Diversification | Retail/SME/corporate balance reduces cyclicality |
| Digital transformation | Phygital scale-up with better opex/underwriting |
| Asset quality | Among best-in-class for large NBFCs |
| Valuation | Fair and justified premium |
| Long-term potential | Beneficiary of India’s structural credit growth |
Additional Insights (Important)
- Capital Adequacy Buffer: Fresh equity strengthens Tier-I, supporting loan growth while keeping CRAR comfortable amid expansion.
- Liquidity & Liability Mix: Access to diversified borrowings (banks, bonds, securitisation) can cushion funding-cost volatility.
- Synergies Post Merger: Integration of Tata Motors Finance boosts scale, OEM relationships, and cross-sell potential across retail/SME ecosystems.
- Operating Leverage: Continued digitisation may aid cost-to-income over time, supporting ROE improvements.
Key Risks to Track
- Interest-rate & Liquidity Cycles: NBFC earnings are sensitive to funding costs and liquidity tightness.
- Asset-quality Normalisation: Rapid growth phases can see rising credit costs if underwriting discipline slips.
- Competitive Intensity: Banks/fintechs vying for similar customers can pressure yields/margins.
- Valuation Risk: Rich multiples can compress if growth moderation or macro shocks occur.
The Bottom Line
Street consensus points to a high-quality, brand-backed NBFC with healthy growth, diversified risk, and improving profitability. For investors seeking a long-term compounder aligned with India’s financial deepening, the IPO has emerged as a consensus “Subscribe”—subject to individual risk tolerance and allocation outcomes.
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