Tata Capital IPO Review & Analysis – India’s Biggest NBFC IPO
In July–August 2025, Tata Capital Ltd. is set to launch what could be the largest NBFC IPO in Indian history, estimated at ₹17,200 crore. After HDB Financial Services’ successful ₹12,500 crore issuance in June, all eyes are on Tata Capital’s pricing, valuation, and listing gains. This comprehensive, human-tone review will cover:
- IPO overview & expected timeline
- Business model & segment mix
- Assets Under Management (AUM) & financial performance
- Asset quality: Gross & Net NPAs
- Peer comparisons: HDB Financial & Tata Technologies
- Unlisted grey-market valuation (P/E, P/B ratios)
- Regulatory factors & RBI SEBI mandates
- Listing gain potential & retail strategy
- Risks, overvaluation concerns
- How to apply & practical tips
- Verdict: Apply or Avoid?
- FAQs
1. IPO Overview & Expected Timeline
Tata Capital, a ₹2.5 lakh crore diversified NBFC and a 92% subsidiary of Tata Sons, has filed its draft red herring prospectus (DRHP) with SEBI and is awaiting publication of the final RHP. The ₹17,200 crore IPO will combine a fresh issue (to bolster capital for growth & RBI upper-layer norms) and an Offer-for-Sale (OFS) by Tata Sons. Key points:
| Parameter | Details |
|---|---|
| Issue Size | ₹17,200 crore (approx.) |
| Components | Fresh Issue + OFS by Tata Sons (and select promoters) |
| Expected Price Band | ₹550–₹600 per share (grey-market ₹900–₹950) |
| Lot Size | 30 shares per lot (anticipated) |
| Retail Quota | 35% of issue |
| Anchor Book | ₹5,000 crore (estimated) |
| Subscription Window | Late July 2025 |
| Listing Timeline | End-July to early August 2025 |
| Regulatory Deadline | Must list by Sep 30, 2025 (RBI upper-layer NBFC mandate) |
2. Tata Capital’s Business Model
Tata Capital offers a full spectrum of financial products across retail, SME and corporate segments. Its diversified portfolio and strong parent support make it one of India’s top NBFCs. Major segments:
- Retail Lending: Home loans, personal loans, auto/used-car finance, education loans, loans against property.
- SME & Business Loans: Working capital, machinery finance, channel finance & invoice discounting.
- Corporate Finance: Project finance, construction finance, equipment leasing, sustainable “cleantech” funding.
- Credit Cards: Co-branded “Tata Card” in partnership with SBI Cards.
- Wealth & Asset Management: Portfolio management services (AUM ₹5,500 cr as of June 2025), mutual fund distribution.
- Insurance & Other Services: Broking, distribution of life/general insurance, institutional lending via Tata Securities & Tata Cleantech.
2.1 Segment Revenue Mix (FY 2024)
| Segment | Revenue Contribution | Key Trends |
|---|---|---|
| Retail Loans | 45% | Strong growth in home & auto loans |
| SME & Business Loans | 25% | Higher demand in micro & small enterprises |
| Corporate Finance | 15% | Steady large‐ticket project funding |
| Credit Cards | 5% | Rising card spends & AuM |
| Wealth & AM | 7% | HNW client additions |
| Insurance & Others | 3% | Partnership expansions |
3. Asset Base & AUM Growth
Assets Under Management (AUM) is a key metric for NBFCs. Tata Capital has grown its loan book aggressively:
| Year | AUM (₹ Crore) | YoY Growth |
|---|---|---|
| Mar 2023 | 1,35,600 | — |
| Mar 2024 | 1,76,700 | 30.3% |
| Jun 2025 (Provisional) | 2,48,500 | 40.6% |
In just 15 months, Tata Capital’s AUM nearly doubled, driven by retail and SME lending. The strong growth reflects both pent-up demand and competitive funding access.
4. Financial Performance (FY 2023–25)
Consolidated financials show robust revenue and profit expansion:
| Metric (₹ Cr) | FY 2023 | FY 2024 | FY 2025* |
|---|---|---|---|
| Total Income | 13,640 | 18,200 | 28,300 |
| Interest Income | 9,200 | 14,500 | 23,800 |
| Net Interest Income | 4,000 | 6,100 | 10,200 |
| Profit After Tax | 2,980 | 3,330 | 3,660 |
| Return on Assets (RoA) | 1.8% | 1.9% | 1.7% |
| Return on Equity (RoE) | 10.2% | 10.8% | 9.8% |
*FY 2025 figures are provisional estimates up to June 2025.
5. Asset Quality: NPAs & Provisions
Post-merger of Tata Motors Finance (Sep 2024), gross NPAs rose; however, net NPAs remain comfortable:
| Year | Gross NPA | Net NPA | Provision Coverage Ratio |
|---|---|---|---|
| Mar 2023 | 2.00% | 1.10% | 72% |
| Mar 2024 | 1.70% | 0.95% | 75% |
| Jun 2025 | 2.30% | 1.05% | 70% |
The slight uptick in GNPA reflects integration of TMF’s legacy assets. Tata Capital has earmarked IPO proceeds and a recent rights issue to strengthen capital and provisioning buffers.
6. Peer Comparison: HDB Financial & Tata Technologies
Understanding outcomes of recent large IPOs helps set expectations:
| Company | Issue Size | Issue Price | Listing Price | Gain |
|---|---|---|---|---|
| HDB Financial (June 2025) | ₹12,500 Cr | ₹740 | ₹835 | +12.8% |
| Tata Technologies (Nov 2023) | ₹3,040 Cr | ₹500 | ₹1,200 | +140% |
HDB saw modest gains, reflecting cautious NBFC sentiment. Tata Technologies delivered blockbuster returns, buoyed by strong growth narrative. Tata Capital’s massive scale will test investor appetite.
7. Unlisted Grey-Market Valuation
As of early July 2025, grey-market quotes for Tata Capital shares hovered at ₹900–₹950. Based on FY 2025 earnings (~₹3,660 Cr), implied multiples:
| Metric | Implied Value |
|---|---|
| Market Cap (Unlisted) | ₹3.8 Lakh Cr |
| P/E Ratio | ~104x |
| Book Value | ₹85 per share |
| P/B Ratio | ~11x |
These multiples are significantly above listed NBFC peers (typical P/E ~15–25x; P/B ~2–5x), indicating high expectations or potential overvaluation.
8. Regulatory Landscape & RBI Mandate
In October 2023, the RBI’s scale-based framework classified Tata Capital as an “upper-layer” NBFC. Key requirements:
- Must list on stock exchanges by September 30, 2025.
- Maintain minimum Tier-1 capital >15%.
- Adhere to stricter governance, exposure norms.
The impending IPO helps Tata Capital comply with these norms and strengthen its capital base for growth.
9. Listing Gain Potential & Retail Strategy
Listing gain depends on IPO pricing vis-à-vis grey-market levels. If Tata Capital sets the band at ₹550–₹600 (vs grey ₹900+), potential gain could be 50–70% on day one. A realistic retail approach:
- Apply at cut-off or lower band if comfortable with high risk.
- Allocate modest capital (avoid concentration risk).
- Track grey market premium (GMP) & anchor book subscriptions.
- Plan exit triggers (e.g., +20–30% listing gain).
10. Risks & Overvaluation Concerns
Major risk factors include:
- Valuation risk: Extremely high P/E & P/B vs peers.
- Credit risk: Rising NPAs post-TMF merger.
- Rate risk: Higher funding costs if interest rates climb.
- Market sentiment: Volatility in broader equity markets.
- Regulatory shock: Unexpected RBI or SEBI policy changes.
Investors must weigh potential upside against these substantial risks.
11. How to Apply & Practical Tips
Steps for retail bidders:
- Ensure your Demat & PAN details are updated.
- Use ASBA through your bank or broker.
- Decide on lot count (multiples of 30 shares).
- Bid within the price band (monitor grey market for signals).
- Block funds in your account until allotment.
- Check allotment status online and list on the exchange upon issue date.
Useful resources:
12. Verdict: Apply or Avoid?
Apply if:
- You are comfortable with NBFC valuations and high risk.
- You bid at the lower end of the band (₹550–₹600) to safeguard listing gains.
- You plan only a small allocation as part of a diversified portfolio.
Avoid or Wait if:
- You believe current grey-market levels are stretched.
- You dislike high leverage and NPA risk in NBFCs.
- You prefer established listed peers with lower multiples.
Frequently Asked Questions (FAQs)
Q1. What is the final issue size of Tata Capital IPO?
A. Approximately ₹17,200 crore combining fresh issue and OFS.
Q2. When will the IPO open?
A. Likely late July 2025; official RHP will confirm exact dates.
Q3. What price band should I expect?
A. Estimates range between ₹550–₹600; watch the RHP for confirmation.
Q4. How many shares per lot?
A. Anticipated 30 shares per lot, similar to recent large IPOs.
Q5. Should retail investors apply?
A. Only if comfortable with high NBFC valuations and willing to risk moderate NPA headwinds. Allocate judiciously.
Q6. Where can I track IPO updates?
A. Follow SEBI announcements, BSE/NSE websites, and reliable IPO trackers like ScanX.
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