Tata Capital IPO price band set at steep discount to unlisted market

Tata Capital IPO

Tata Capital Ltd has fixed a price band of Rs 310–326 per share for its upcoming initial public offering (IPO), below its recent rights issue price and nearly 55 percent lower than its prevailing unlisted market price of Rs 735.

The stock, once quoted at Rs 1,075 in the grey market in early June, has slipped 32 percent in recent weeks on the back of heightened market volatility, a rights issue priced at Rs 343 in July 2025, and weakness across the financial sector. Unlisted shares had touched a peak of Rs 1,125 in April 2025, implying a nearly 70 percent erosion to the IPO band.

Market watchers point out that retail investors who bought heavily in the unlisted space—often at the urging of brokers—now face sharp notional losses. A similar pattern was seen in HDB Financial Services, whose unlisted stock fell 40 percent from Rs 1,200 to Rs 740 before its June 2025 IPO, which listed at Rs 777—a modest 5 percent premium. Post-listing, pre-IPO buyers remain locked in for six months.

Tata Capital’s trajectory mirrors this trend, with its unlisted shares already down 30–36 percent since April. The National Securities Depository Ltd IPO also serves as a cautionary tale—its grey market premium evaporated into a 35 percent listing-day plunge, leaving retail investors bruised. Between 2023 and 2025, nearly 30 percent of Indian IPOs listed below their issue price, amplifying risks for grey market participants.

Analysts note that Tata Capital’s unlisted shares commanded hefty valuations at 8.5–11 times price-to-book, well above peers such as Bajaj Finance (5.9x) and Shriram Finance (4x). “The hype around the Tata brand, stoked by a network of brokers, inflated prices to unsustainable levels. Brokers booked gains, but clients are left holding losses,” said one market expert.

Looking ahead, recovery to grey market levels appears uncertain. Tata Capital’s diversified portfolio (88 percent retail and SME loans, Rs 2.37 lakh crore AUM, 28–37 percent CAGR) and brand backing provide structural strength. However, with a lofty P/E multiple of 113x and a modest 12 percent return on equity, analysts see limited near-term upside compared with peers.

Further corrections are possible if grey market premiums weaken or broader sentiment turns bearish. For unlisted investors, the IPO marks painful markdowns. For fresh IPO applicants, however, the lower entry point may prove an advantage, experts added.

At the upper price band, the fresh issue will be around Rs 6,846 crore, while the offer for sale will be around Rs 8,665.87 crore. The anchor book size will be approximately Rs 4,642 crore, and the company’s market capitalization will be about Rs 1.38 lakh crore.