Tata Capital’s Rs 15,500-crore initial public offering opened for subscription on October 6, marking the largest issue of 2025 and the biggest since Hyundai Motor India’s listing last year. The Tata Group’s flagship non-banking financial company (NBFC) has drawn intense investor interest for its scale and parentage, yet brokerages remain divided on whether the valuation leaves meaningful upside.
Valuation already prices in stability
The IPO is priced at Rs 310-326 per share, valuing the company at roughly Rs 1.38 lakh crore post-issue. At the upper band, Tata Capital commands a price-to-book multiple of 3.4-4.1 times and a price-to-earnings multiple near 32 times, broadly comparable with large diversified NBFCs.
Brokerages differ on what this implies for investors
The issue is valued at 3.4 times post-issue book and around 4.1 times trailing book at the upper end of the price band. Deven Choksey Research called it ‘fairly valued at 4.1× P/B and 1.9 percent RoA versus peer average 3.7× P/B and 3.0 percent RoA.’
SBI Securities said that the valuation lies ‘towards the upper end of the fair range’ given near-term profitability pressure from the Tata Motors Finance merger. ICICI Direct, which did not rate the issue, described Tata Capital as ‘a well-capitalised, diversified and prudently managed NBFC with strong parentage and brand equity.’
Anand Rathi and Aditya Birla Capital both advised Subscribe - Long Term, citing the group’s credibility, capital adequacy and long-run scalability despite compressed margins .
Steady growth, modest profitability
Tata Capital’s consolidated loan book rose at a 37 percent CAGR during FY23-FY25, reaching Rs 2.33 lakh crore by June 2025, with retail and SME loans accounting for 87.5 percent of the total.
However, its profitability metrics remain well below top-tier peers. Analysts note that Tata Capital’s NIM around 5 percent, RoA below 2 percent, and RoE near 12-13 percent trail industry leaders such as Bajaj Finance and Cholamandalam Finance, which report much higher margins and returns.
Analysts attribute Tata Capital’s lower ratios to higher credit costs, a dip in provision coverage (to ~59 percent) and a rising cost of funds -- up from 6.6 percent in FY23 to 7.8 percent in FY25 -- as well as short-term integration costs from the merger of Tata Motors Finance Ltd (TMFL). These factors are expected to temper near-term returns even as the franchise scales its retail and SME footprint through an extensive “phygital” distribution model spanning 1,516 branches and 30,000-plus partners.
Tata Capital vs Bajaj Finance vs Peers
Brokerages broadly agree that Tata Capital’s valuation sits midway between stability-driven NBFCs and high-growth outliers such as Bajaj Finance. The comparison below, drawn from SBI Securities, ICICI Direct, and Deven Choksey Research, shows where the franchise stands on key metrics.
| Metric (FY25) | Tata Capital | Bajaj Finance | Peer Average |
| AUM / Loan Book | Rs 2.33 lakh crore | Rs 4.16 lakh crore | Rs 1-3 lakh crore |
| NIM | 5.1-5.2% | 9.9% | 7-10% |
| RoA | 1.8-1.9% | 4.6% | 2.2-3.5% |
| RoE | 12-13% | 19.2% | 15-20% |
| Gross NPA | 1.9% | 1.2% | 2.3-4.6% |
| Provision Coverage Ratio | 59% | 53% | 45-70% |
| Cost of Funds | 7.8% | 7.6% | 7-8% |
| P/B (x) | 3.4-4.1 | ~7.0 | 2-6 |
| P/E (x) | ~32 | ~37 | 23-33 |
Tata Capital trades at near-peer valuation levels despite lower profitability and margins. Brokerages say this is due to the investor confidence in its brand, parentage and risk discipline rather than short-term earnings momentum.
The Tata premium debate
Brokerages broadly agree that Tata Capital’s valuation premium rests on governance comfort rather than earnings superiority. ICICI Direct cited the company’s AAA domestic rating and BBB- (sovereign-capped) international rating, saying these contribute to one of the lowest funding costs among NBFCs.
By contrast, Deven Choksey Research said that ‘while Tata Capital is well placed to scale its loan book at a healthy pace, its returns appear low compared with other listed NBFCs.’ The firm emphasised that despite brand strength and balance-sheet comfort, investors should view the issue as fully priced for stability rather than for near-term alpha.
Institutional endorsement, measured expectations
Ahead of the issue, Tata Capital raised Rs 4,642 crore from 135 anchor investors, led by LIC, Morgan Stanley, Goldman Sachs and Amansa Holdings. Eighteen domestic mutual funds subscribed more than Rs 1,650 crore collectively. The broad institutional participation reinforces long-term confidence but also suggests that listing gains may be limited, given that much optimism is already priced in.
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