Tata Capital
- Tata Capital is coming out with a 100% book building; initial public offering (IPO) of 47,58,24,280 shares of 10 each in a price band Rs 310-326 per equity share.
- Not more than 50% of the issue will be allocated to Qualified Institutional Buyers (QIBs), including 5% to the mutual funds. Further, not less than 15% of the issue will be available for the non-institutional bidders and the remaining 35% for the retail investors.
- The issue will open for subscription on October 6, 2025 and will close on October 8, 2025.
- The shares will be listed on BSE as well as NSE.
- The face value of the share is Rs 10 and is priced 31.00 times of its face value on the lower side and 32.60 times on the higher side.
- Book running lead managers to the issue are Kotak Mahindra Capital Company, Axis Capital, BNP Paribas, Citigroup Global Markets India, HDFC Bank, HSBC Securities and Capital Markets (India), ICICI Securities, IIFL Capital Services, J.P. Morgan India and SBI Capital Markets.
- Compliance Officer for the issue is Sarita Kamath.
Profile of the company
Tata Capital, the flagship financial services company of the Tata group and a subsidiary of Tata Sons Private Limited, the holding company of the Tata group and the Promoter of the company. With a legacy spanning over 150 years, the Tata group is one of India’s most distinguished business groups, comprising companies across 10 verticals such as automotive, technology, steel, financial services, aerospace and defence, and consumer and retail. The “Tata Group” brand was recognised as the most valuable brand in India as per the Brand Finance India 100 2025 report.
The company is third largest diversified NBFC in India with Total Gross Loans of Rs 2,334.0 billion as at June 30, 2025; are among the fastest growing large diversified NBFCs in India based on growth in Total Gross Loans, with Total Gross Loans growing at a CAGR of 37.3% from March 31, 2023 to March 31, 2025; and have a track record of sustained growth while maintaining its asset quality, as evidenced by its metrics such as, Gross Stage 3 Loans Ratio of 2.1%, Net Stage 3 Loans Ratio of 1.0% and Provision Coverage Ratio (PCR) of 53.9%, which are among the best across large diversified NBFCs in India as at June 30, 2025. The company’s Total Gross Loans (excluding TMFL) grew at a CAGR of 28.4% from March 31, 2023 to March 31, 2025. Its asset quality (excluding TMFL) stood at Gross Stage 3 Loans Ratio of 1.5%, Net Stage 3 Loans Ratio of 0.5% and PCR of 65.8% as at March 31, 2025.
The company operates an omni-channel distribution model that combines its wide branch network, a robust partner ecosystem, and a strong digital presence, all of which work together to deliver a superior customer experience. It has an extensive Pan-India distribution network comprising 1,516 branches across 27 States and Union Territories, as at June 30, 2025. Its branches are typically staffed with an in-house team responsible for customer engagement, acquisition, loan processing, documentation and servicing.
Proceed is being used for:
- Augmentation of the company’s Tier I capital base to meet the company’s future capital requirements including onward lending
Industry Overview
NBFCs are classified based on liabilities into two broad categories: a) deposit-taking; and b) non-deposit-taking. Further, in 2015, non-deposit-taking NBFCs with an asset size of Rs 5 billion and above were labelled as ‘systemically important non-deposit taking NBFCs’ (NBFC-ND-SI) and separate prudential regulations were made applicable to them. The credit growth of NBFCs which has trended above India’s GDP growth historically, is expected to continue to rise at a faster pace. NBFCs have shown remarkable resilience and gained importance in the financial sector ecosystem, growing from less than Rs 2 trillion AUM at the turn of the century to Rs 48 trillion at the end of FY25. During FY19 to FY25, NBFC credit is estimated to have witnessed a growth at CAGR of 13.2%. NBFCs AUM as of FY19 was approximately Rs 23 trillion which has grown at a 6 year CAGR of 13.2% to Rs 48 trillion as of FY25. Rapid revival in the economy is expected to drive consumer demand in FY26, leading to healthy growth in NBFCs. Going forward, NBFC credit is expected to grow at 15-17% between FY25 and FY28 driven by growth across retail, MSME and corporate segments continuing to be the primary drivers.
The NBFC sector has, over the years, evolved considerably in terms of size, operations, technological sophistication, and entry into newer areas of financial services and products. The number of NBFCs as well as the size of the sector have grown significantly, with several players with heterogeneous business models starting operations. The increasing penetration of neo-banking, digital authentication, and mobile phone usage as well as mobile internet has resulted in the modularization of financial services, particularly credit. Overall NBFC credit during FY19 to FY25, is estimated to have witnessed a CAGR of 13.2% which was majorly led by retail segment which is estimated to have witnessed a CAGR of 15.4%, while NBFC non-retail credit is estimated to have witnessed a growth of 11.5% during the same time period.
Indian Non-Banking Financial Companies sector’s outlook is optimistic in coming future, driven by an anticipated easing of regulatory pressures and a favorable interest rate environment. Reduction in the repo rate is likely to help NBFCs reduce borrowing costs, pass it on to the customers potentially increasing credit demand. As a result of lower borrowing costs, the system’s liquidity may increase, influencing purchases and leading to an increase in manufacturing activities and overall economic growth. Further, India’s economic growth and rising per capita income are expected to drive growth in financial requirements, opening new avenues of growth for NBFCs. Also, increased formalization and urbanization will present opportunities for the sector. The sector remains well-positioned to leverage its fundamentals and capitalise on emerging opportunities in a gradually stabilizing economic environment. Besides, margins of industry are likely to improve in coming future as the asset quality of sector improved in first half of financial year 2025, reflecting a consistent focus on risk management and operational efficiency.
Pros and strengths
Flagship financial services company of the Tata group, with a legacy of over 150 years: The company is flagship financial services company of the Tata group, which is one of India’s most distinguished business groups, with a legacy of over 150 years. Its Promoter, Tata Sons Private Limited, is the holding company of the Tata group. The Tata group (a) comprised companies across 10 verticals such as automotive, technology, steel, financial services, aerospace and defence, and consumer and retail; (b) is a global enterprise headquartered in India, with operations in more than 100 countries across six continents and collectively employed over 1 million employees, as at March 31, 2025; and (c) has the most diversified presence across industries in India as at March 31, 2025, and is the largest group in India with 26 equity listed companies with a combined market capitalisation of Rs 27.8 trillion, as at March 31, 2025. The “Tata Group” brand was recognised as the most valuable brand in India by Brand Finance in its 2025 report.
Third largest diversified NBFC in India, with the most comprehensive lending product suite: The company is the third largest diversified NBFC in India based on its Total Gross Loans of Rs 2,334.0 billion as at June 30, 2025, and the most comprehensive amongst large diversified NBFCs in India based on the number of loan product offerings, as at March 31, 2025. TCHFL, its Material Subsidiary which operates in the housing finance sector, had Total Gross Loans of Rs 711.5 billion, as at June 30, 2025 compared to Rs 377.3 billion as at March 31, 2023 and grew at a CAGR of 32.6% from March 31, 2023 to March 31, 2025. It offers a comprehensive suite of more than 25 lending products catering to the financial requirements of a wide range of customers comprising salaried and self-employed individuals, entrepreneurs, small and medium enterprises and corporates. Its loan offerings to customers comprised a wide range of ticket sizes ranging from Rs 10,000 to over Rs 1 billion, as at June 30, 2025.
Omni-channel distribution model: The company has built an omni-channel distribution network which combines its Pan-India branch network with an extensive network of external partners and its digital platforms. This ‘phygital’ model enables it to customise its distribution strategy based on the customer profile, type of product, and location, thereby optimising its distribution efforts and facilitating a seamless customer experience.
Digital and analytics at the core of its business: Digital and analytics form the foundation of its approach to business. The company has integrated technology across the entire customer lifecycle for all lending products in its three business verticals, including onboarding, underwriting, collections, customer servicing and cross-selling, to enable it to meet the evolving needs of its customers, enhance the customer experience and drive sustainable business growth and operational efficiency. Its digital and analytics capabilities enable it to enhance revenue streams, cross-sell capabilities and drive productivity to optimize its operating costs and credit costs, strengthening its efforts to become a digital leader in the financial services industry.
Risks and concerns
Unsecured gross loans comprised significant portion of total gross loans: Unsecured Gross Loans comprised 20.0%, 22.4%, 21.0%, 24.5% and 23.1% of its Total Gross Loans as at June 30, 2025, June 30, 2024, March 31, 2025, March 31, 2024 and March 31, 2023, respectively. Failure to recover such receivables in a timely manner or at all may adversely affect its business, results of operations, cash flows and financial condition.
Maximum portion total gross loans come from retail finance: Retail Finance comprised 61.3%, 64.2%, 62.3%, 58.9% and 56.7% of Total Gross Loans as at June 30, 2025, June 30, 2024, March 31, 2025, March 31, 2024 and March 31, 2023, respectively. Any adverse developments that reduce demand for loans amongst retail customers and/or increase loan default rates amongst retail customers will adversely affect its business, results of operations and prospects.
Significant exposure to the real estate sector: Home Loans, loans against property and developer finance together amounted to 34.7%, 32.2%, 33.8%, 37.4% and 37.3% of its total Gross Loans as at June 30, 2025, June 30, 2024, March 31, 2025, March 31, 2024 and March 31, 2023, respectively. In relation to its home loans, loans against property and developer finance, it has significant exposure to the real estate sector and any negative trends affecting this sector could adversely affect its business and result of operations.
Significantly dependent on the strength of the “Tata” brand: The company relies on the strength of the “Tata” brand, which it uses pursuant to licensing arrangements with its Promoter, Tata Sons Private Limited. Any improper use of the associated trademarks by the licensor or any other third parties, or any negative publicity affecting the brand, could materially and adversely affect its business, financial condition and results of operations.
Outlook
Tata Capital operates as a NBFC in India, offering a wide range of financial products and services to retail, corporate, and institutional customers. It is Flagship financial services company of the Tata group and the third largest diversified NBFC in India, with the most comprehensive lending product suite. The company has highest credit rating with a diverse liability profile. On the concern side, unsecured gross loans comprised significant portion of total gross loans and failure to recover such receivables in a timely manner or at all may adversely affect its business, results of operations, cash flows and financial condition. Moreover, maximum portion total gross loans come from retail finance. Any adverse developments that reduce demand for loans amongst retail customers and/or increase loan default rates amongst retail customers will adversely affect its business, results of operations and prospects.
The issue has been offering 47,58,24,280 shares in a price band of Rs 310-326 per equity share. The aggregate size of the offer is around Rs 14,750.55 crore to Rs 15,511.87 crore based on lower and upper price band respectively. Minimum application is to be made for 46 shares and in multiples thereon, thereafter. On performance front, the company’s revenue from operations increased by 55.8% to Rs 283,127.4 million in Fiscal 2025 from Rs 181,748.2 million in Fiscal 2024. Moreover, the company’s profit for the year attributable to owners of the company increased by 16.3% to Rs 36,646.6 million in Fiscal 2025 from Rs 31,502.1 million in Fiscal 2024.
The company’s growth has been driven by a diverse portfolio of more than 25 lending products and its extensive Pan-India presence with 1,516 branches, catering to the needs of various customer segments. It is committed to sustain this growth by identifying promising business opportunities that offer long-term potential for profitability and sustainability. Moving forward, it will continue to expand its product range and launch innovative solutions to meet evolving market demands and customer expectations. Further, it shall continue to strengthen its existing relationships and onboard new partners, including DSAs, OEMs, and dealers. At the same time, it will continue to enhance its digital distribution channels -- such as mobile apps, its website, and digital partnerships -- to broaden its reach and deliver a more seamless and cost-effective customer experience.
