Tata Capital IPO priced to woo retail investors, CEO says growth levers remain strong

markets

Tata Capital Ltd. has opted for a conservative pricing strategy for its initial public offering, aiming to broaden its shareholder base even as bankers suggested there was room to push valuations higher, according to the company.

“The board felt it was more important at this stage to get more retail investors rather than maximise near-term value,” Rajiv Sabharwal, managing director and chief executive officer, told Moneycontrol in an exclusive interaction. “This is the best time to bring them in, and so we priced the IPO at a 5% discount to the last rights issue price.”

The Rs 15512-crore issue, set to open on October 6, is the fourth-largest IPO in India. It’s priced at Rs 310–326 per share, valuing the company at about Rs 15,512 crore at the upper end of the band. That’s a steep markdown compared with the unlisted market, where shares had traded as high as Rs 1,125 earlier this year before easing to Rs 735–800. The IPO valuation still sits below those levels, offering headroom for a premium listing, bankers said.

At the upper end of the price bank, the stock is price at P/b of 5.2x times, compared to peers Bajaj Finance and Shriram Finance at 6.4x and 2x.

The Tata edge

The sale — a mix of fresh equity and an offer for sale — will reduce Tata Sons Pvt.’s holding from roughly 95% to about 86%. Current rules require promoters to trim stakes to 75% within five years, though a recent SEBI consultation paper has proposed extending the timeline for large issuers.

Sabharwal said Tata Capital will continue to draw on the group’s governance standards and financial support. “Tata Sons has always backed us with capital for growth. Going forward, all options exist — rights, fresh issuance, OFS. Capital has never been a concern,” he said, adding that the company’s scale gives it easy access to markets.

Growth levers

Tata Capital has delivered more than 25% annualised loan growth over the past three years. Growth slowed to 17% in FY25 due to the merger with Tata Motor Finance, though underlying growth excluding that business was 23% in the first quarter of FY26, Sabharwal said. “This year our focus is on integration — technology and people — rather than chasing growth in that book. Once integration is complete, growth will accelerate.”

The recent GST rate cuts are expected to boost credit demand, particularly in autos. “The auto sector — PVs, CVs and two-wheelers — has already seen an immediate positive impact, with dealers seeking more financing,” Sabharwal said. Real estate and other industries will take longer to benefit, he added.

On trade headwinds from US tariffs, Sabharwal said portfolio risk is limited. “Our clients are either large companies with diversified exports or are shifting into new geographies. Indian entrepreneurs adapt very fast,” he said.

Future growth

Beyond lending, Tata Capital plans to deepen bets in private equity and wealth management. It is raising a third fund after fully returning capital from Fund I and deploying Fund II, with decarbonisation and healthcare key themes. “Both funds have performed well. Decarbonisation is another strong prospect,” Sabharwal said. The firm also sees wealth management as a growth driver. “It aligns well with the Tata brand, which stands for trust and the right advice,” he said.

Currently, 53% of borrowings come from banks and institutions, 36% from NCDs, and the rest from multilateral lenders and overseas bonds. “We aim to optimise the cost of funds and maintain balance between fixed and floating rates. The mix may shift only marginally, maybe 2%,” Sabharwal said

With the listing, Tata Capital will join Bajaj Finance Ltd. and L&T Finance Holdings Ltd. as one of India’s largest diversified NBFCs, supported by its lending franchise and expanding non-lending businesses. The group’s willingness to test markets with one of the country’s biggest financial IPOs underscores confidence in India’s capital market depth.