Tata Capital, one of the biggest non-banking financial companies in India, has opened its maiden issue for subscription. The firm offers investors a mix of steady profitability and moderate pricing compared to its listed peers such as Bajaj Finance, Cholamandalam Investment, Shriram Finance, and HDB Financial Services.
Issue Details:
The company’s Rs 15,512 crore IPO, priced between Rs 310 and Rs 326 per share, will close on October 8. At the upper end of the price band, the NBFC is valued at around Rs 1.38 lakh crore. The public issue comprises 47.58 crore shares, including a fresh issue of 21 crore equity shares and an offer for sale of 26.58 crore shares.
Valuation Metrics:
Tata Capital, valued at Rs 1.38 lakh crore, trades at 4.1 times its trailing book value, making it one of the most richly valued NBFCs after Bajaj Finance, which commands a 6.4x multiple.
The company’s strong financial metrics, including an AUM CAGR of 37.3 percent and PPoP (Pre-Provision Operating Profit) CAGR of 33.2 percent over FY23-25, are higher than L&T Finance and Shriram Finance.
Despite a NIM of 5.2 percent and a cost of funding of 7.8 percent, Tata Capital’s asset quality remains robust with NNPA at just 0.8 percent. Its return on equity stands at 12.6 percent, lower than Bajaj Finance’s 17.2 percent but comparable to HDB Financial’s 13.8 percent.
Peer comparison:
Tata Capital stands out among major NBFCs with strong operational performance and balanced valuation metrics. The company reported revenue from operations of Rs 28,313 crore in FY2025, positioning it behind larger peers like Bajaj Finance and Shriram Finance but ahead of L&T Finance and HDB Financial Services; the firm offers a return on average equity of 11.2 percent and a P/E of 35.05 (based on the upper-end of the price band)..
Tata Capital is smaller in scale compared to Bajaj Finance and Shriram Finance. With 1,496 branches and nearly 29,400 employees, it operates a smaller network relative to listed peers like Bajaj Finance, which runs over 4,200 branches and employs more than 64,000 people.
Tata Capital’s gross loan book of Rs 2.26 lakh crore is about half of Bajaj Finance’s Rs 4.16 lakh crore and slightly below Shriram Finance’s Rs 2.63 lakh crore. Its FY25 interest income stood at Rs 25,720 crore, generating a net interest income (NII) of Rs 10,690 crore, which is lower than Bajaj Finance’s Rs 36,393 crore but comparable to Cholamandalam Investment’s Rs 11,253 crore.
In terms of profitability, Tata Capital reported a profit after tax of Rs 3,665 crore in FY25, lagging behind Bajaj Finance’s Rs 16,638 crore and Shriram Finance’s Rs 9,761 crore, but ahead of L&T Finance and Sundaram Finance. The company’s disbursements at Rs 1.42 lakh crore also surpasses peers like L&T Finance and HDB Financial Services.
What are brokerages saying?
On comparing its valuation and return profile of ~4.1x P/B and ~1.9 percent RoA, compared to peer average of ~3.7x P/B and ~3.0 percent RoA, Tata Capital’s issue appears fairly valued.
“Although, we believe that it will be able to scale its loan book at a healthy pace, driven by its omni-channel presence and strong parentage, its returns appear low compared to other listed NBFC’s. We assign a “neutral” rating to the issue,” said DevenChoksey Research.
Mirae Asset Sharekhan noted that strong risk management, including stable underwriting and an ~80 percent secured book, helps Tata Capital maintain steady asset quality. A robust branch network further enables future growth. The company is currently valued at about 3.5x P/B post-issue.
Post the merger with Tata Motors Finance, Tata Capital is expected to witness enhanced scale of operations, product diversification, increase in geographic reach, improved capital efficiency, operating synergies, and positions the firm as a full-stack, pan-India vehicle financier across retail, dealer, and supply chain segments. “We would hence recommend a subscribe to the issue,” suggested Aum Capital.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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