Tata Capital, the flagship financial services company of the Tata Group, is preparing for a ₹15,000 crore ($2 billion) Initial Public Offering (IPO). This marks a significant milestone for the company and the entire Tata Group, as it will be the largest IPO from Tata Group companies to date. Scheduled for listing by September 2025, Tata Capital’s IPO is driven by the Reserve Bank of India (RBI) regulations requiring upper-layer Non-Banking Financial Companies (NBFCs) to go public within a three-year timeframe.
Reasons for Going Public
The main reason behind Tata Capital’s decision to list is compliance with the RBI’s guidelines for upper-layer NBFCs, which requires these companies to be listed by September 2025. The IPO will help Tata Capital satisfy this regulatory requirement and open the door for additional capital to support its business growth and expansion. As part of Tata Capital’s growth strategy, the IPO will also enhance the company’s visibility and market credibility.
IPO Details
The Tata Capital IPO will consist of 23 crore new shares, issued at a face value of ₹10 per share. Additionally, there will be an Offer for Sale (OFS) by eligible shareholders. The issue price for the shares will be declared at a later date. Apart from the IPO, the company has also approved a ₹1,504 crore rights issue to improve its financial position. The record date for the rights issue is set for February 25.
Key IPO Details:
| IPO Information | Details |
| Total Issue Size | ₹15,000 crore ($2 billion) |
| Fresh Issue | ₹5,000 crore |
| Offer for Sale (OFS) | ₹10,000 crore |
| New Shares Issued | 23 crore |
| Face Value | ₹10 per share |
| Record Date for Rights Issue | February 25 |
| IPO Listing Date | To be announced |
Financial Performance of Tata Capital
Tata Capital has demonstrated strong financial growth over the years, with a substantial increase in its revenue, profit, and loan book. The company’s ability to increase its loan book, maintain profitability, and manage risks effectively reflects its robust business model.
Key Financial Metrics
| Particulars | FY 2021-22 | FY 2022-23 | FY 2023-24 (Estimated) |
| Revenue from Operations | ₹13,628 crore | ₹18,174 crore | ₹18,198 crore |
| Total Income | ₹13,637 crore | ₹18,198 crore | ₹18,198 crore |
| Operating Expenses | ₹9,847 crore | ₹9,568 crore | ₹10,000 crore (estimated) |
| Profit After Tax (PAT) | ₹2,945 crore | ₹3,326 crore | ₹3,327 crore |
| Earnings per Share (EPS) | ₹5.35 | ₹6.47 | ₹6.78 |
| Gross NPA | 1.9% | 1.71% | 1.71% |
| Net NPA | 0.6% | 0.4% | 0.38% |
Financial Ratios
| Ratio | FY 2021-22 | FY 2022-23 | FY 2023-24 |
| Return on Equity (RoE) | 15.8% | 17.3% | 13.5% |
| Price-to-Book (P/B) | 13.6 | 13.6 | 15.8 |
| Debt-to-Equity | 0.63 | 0.63 | 0.63 |
Tata Capital’s Business Model
Founded in 2007, Tata Capital operates as an NBFC and offers a wide range of financial services, including commercial finance, consumer loans, wealth management, and distribution of Tata Cards. The company serves a broad customer base, comprising both individual and institutional clients. Tata Capital’s key subsidiaries, such as Tata Capital Housing Finance Limited (TCHFL) and Tata Securities Limited, further enhance its service offerings, including home loans, affordable housing finance, and securities market operations.
Market Potential & Industry Overview
The Indian financial services sector is experiencing robust growth, driven by increasing demand for retail credit and the expansion of small and medium-sized enterprises (SMEs). Tata Capital is well-positioned to benefit from these trends, especially as the NBFC sector is expected to grow at a compound annual growth rate (CAGR) of 15-17% through 2027.
The government’s initiatives to support MSMEs, including schemes like Udyam Assist and PM Vishwakarma, align with Tata Capital’s focus on MSME lending, providing further market opportunities.
Risks & Challenges
Tata Capital faces several risks, including macroeconomic factors like interest rates, inflation, and liquidity. Additionally, borrower defaults, regulatory changes, and declining collateral values may also affect its profitability. As with any financial company, NPA management will be key to maintaining stability and profitability.
Anticipation and Market Impact
The announcement of the Tata Capital IPO has already created significant buzz in the market. Shares of Tata Investment Corporation, another Tata Group entity, have surged by up to 12%, indicating optimistic market sentiment regarding the IPO.
Conclusion
The Tata Capital IPO represents a key moment for both the Tata Group and the Indian financial sector. With a strong financial track record and a diverse product portfolio, Tata Capital is poised for future growth. The IPO will not only help the company comply with regulatory requirements but also provide the capital needed to expand its business operations and continue serving a broad customer base.
Investors looking for a solid financial services company with strong growth prospects and stable profitability may find the Tata Capital IPO to be a promising investment opportunity.
