Tata Capital Ltd – IPO Notice

Firm overview

Tata Capital Restricted is the flagship monetary providers firm of the Tata Group and a wholly-owned subsidiary of Tata Sons Non-public Restricted. It’s the third-largest non-banking monetary firm (NBFC) in India, with a gross mortgage portfolio of Rs.2,334 billion as of June 30, 2025. The corporate affords a diversified vary of over 25 lending merchandise, serving salaried and self-employed people, entrepreneurs, small companies, SMEs, and corporates. With mortgage ticket sizes starting from Rs.10,000 to over Rs.1 billion, Tata Capital maintains a powerful concentrate on the retail and SME segments. Its large distribution community spans 1,516 branches throughout 27 states and union territories, supporting its pan-India presence and buyer attain.

Objects of the supply

• Perform the Provide for Sale of as much as 265,824,280 Fairness Shares by the Promoting Shareholder.
• Augmentation of Firm’s Tier – I capital base to satisfy the corporate’s future capital necessities together with onward lending

Funding Rationale

• Enterprise segments – The corporate operates by means of three key enterprise segments: Retail Finance, SME Finance, and Company Finance. Retail Finance, comprising 61.3% of complete gross loans as of June 30, 2025, contains a variety of choices reminiscent of dwelling loans, private loans, automobile loans, microfinance, and training loans for salaried, self-employed, and small enterprise prospects. SME Finance, contributing 26.2%, offers provide chain finance, gear finance, leasing, and time period loans to companies with turnover as much as Rs.2.5 billion. Company Finance, accounting for 12.5%, serves bigger enterprises with time period loans, infrastructure, cleantech, and developer finance options. Along with its core lending enterprise, Tata Capital operates non-lending companies comprising distribution of third-party merchandise (together with insurance coverage and bank cards), wealth administration providers for high-net-worth and retail purchasers, and a non-public fairness division targeted on two themes: Progress (urbanisation, manufacturing, and strategic providers) and Healthcare (prescription drugs, hospitals, diagnostics, and associated providers).

• Sturdy market place – Tata Capital is the third-largest diversified NBFC in India by complete gross loans of Rs.2,334 billion as of June 30, 2025, and affords essentially the most complete lending product suite amongst massive NBFCs. With over 25 mortgage merchandise catering to a large spectrum of consumers – from salaried people and entrepreneurs to SMEs and corporates – the corporate serves different monetary wants throughout ticket sizes starting from Rs.10,000 to over Rs.1 billion. Its materials subsidiary, TCHFL, which operates within the housing finance phase, has proven sturdy development with gross loans rising at a CAGR of 32.6% between March 2023 and March 2025. The corporate’s well-diversified mortgage ebook, with no single product contributing over 20% of complete gross loans, and its distribution power throughout buyer segments and geographies, assist decrease focus threat and help sustainable, worthwhile development throughout financial cycles.

• Operational Efficiency – Tata Capital has demonstrated sturdy operational efficiency, with its department community rising at a CAGR of 58.3% between June 30, 2023, and June 30, 2025. Throughout this era, its buyer base expanded from 4.8 million to 7.3 million, whereas gross mortgage disbursements rose by 35.5% YoY in FY25 to Rs.1,42,301 crore. This sturdy development displays the corporate’s potential to scale effectively and strengthen its nationwide footprint. The growth in branches and buyer base enhances market attain, whereas rising disbursements enhance income visibility and place the corporate to seize sustained credit score demand throughout key segments.

• Monetary Efficiency – The corporate reported a complete earnings of Rs.28,370 crore in FY25 as towards Rs.18,198 crore in FY24, a development of 56%. The online curiosity earnings of the corporate in FY25 was Rs.5,310 crore. Internet curiosity margin is at 5.1%. The PAT of the corporate in FY25 is Rs.3,029 crore. The CAGR between FY23-25 of complete earnings, internet curiosity earnings and PAT is at 42%, 44% and 10% respectively. Whole gross loans is at Rs.23,399 crore, a CAGR of 37% between FY23-25. The ROA and ROE of the corporate stand at 2.10% and 14.20% respectively in FY25.

Key dangers

• OFS threat – Along with a contemporary challenge, the IPO will see the sale of shares of as much as 230,000,000 by Promoter Promoting Shareholder Tata Sons Non-public Ltd and 35,824,280 fairness shares by Investor Promoting Shareholder Worldwide Finance Company.

• Default threat – The chance of non-payment or default by prospects could adversely have an effect on the corporate’s enterprise, outcomes of operations and monetary situations.

• Regulatory threat – Any incapacity to adjust to the necessities stipulated by RBI may have a fabric antagonistic impact on the corporate’s enterprise.

Outlook

Tata Capital has demonstrated constant development in each mortgage disbursements and internet curiosity earnings throughout reporting durations. Its sturdy model presence and backing from the Tata Group present a strong basis to maintain and speed up its development momentum going ahead. In accordance with RHP, Bajaj Finance Restricted, Shriram Finance Restricted, Cholamandalam Funding and Finance Firm Restricted, L&T Finance Restricted, Sundaram Finance Restricted and HDB Monetary Providers Restricted the listed rivals for Tata Capital Restricted. The friends are buying and selling at a median P/E of 26.58x with the very best P/E of 37.80x and the bottom being 12.10x. On the greater value band, the itemizing market cap of Tata Capital can be round ~Rs. 1,38,382.73 crore and the corporate is demanding a P/E a number of of 37.76x primarily based on put up challenge diluted FY25 EPS of Rs.8.63. When put next with its friends, the difficulty appears to be moderately priced in (pretty valued). Primarily based on the above views, we offer a ‘Subscribe’ score for this IPO for a medium to long-term Holding.

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