Highlights
| Issue Size: – 47,58,24,280 shares | Issue Open/Close – 6 Oct / 8 Oct, 2025 |
| Price Band (Rs.) 310 – 326 | Issue Size (Rs.) – 155,119 mn. |
| Face Value (Rs) 10 | Lot Size (shares) – 46 |
Tata Capital Limited (TCL) is the flagship financial services company of the Tata group and a subsidiary of Tata Sons Private Limited, incorporated on 2007, and categorized as an Upper Layer NBFC by RBI.
TCL’s Lending Business comprises (i) Retail Finance (ii) SME Finance (iii) Corporate Finance each focused on distinct customer needs. Through their comprehensive suite of 25+ lending products, TCL cater to a diverse customer base comprising salaried and self-employed individuals, entrepreneurs, small businesses, small and medium enterprises and corporates. Additionally, they distribute third-party products viz. insurance and credit cards, offer wealth management, and act as sponsor and investment manager to PE funds.
TCL operates an omni-channel distribution model that combines wide branch network, a robust partner ecosystem, and a strong digital presence. TCL have an extensive pan-India distribution network comprising 1,516 branches across 27 States and Union Territories and their branches are typically staffed with an in-house team responsible for customer engagement, acquisition, loan processing, documentation and servicing.
Out of total proceeds of Rs. 155,119 mn, Rs. 6,846 mn would be utilized augmenting company’s Tier – I capital base to meet company’s future capital requirements including onward lending towards and ~Rs. 86,659 mn would go towards existing promoter selling and investor selling shareholders of the company.
Key Highlights
- As of FY25 AUM of NBFC industry Is stood at Rs. 48 trillion. NBFC credit growth has historically trended above India’s GDP growth and is expected to continue rising at a faster pace. Going forward, NBFC credit to grow at 15-17 pct between FY25 and FY28, driven by growth across retail, MSME and corporate segments.
- TCL is more focused on Retail and SME segment which contributes 87 pct of their total gross loans. Their loan portfolio is highly granular, with ticket sizes ranging from Rs. 10,000 to over Rs. 1 bn, and over 98 pct of their Loan accounts have a ticket size of less than Rs. 10 mn, in addition, 80 pct of their total gross loans were secured.
- TCL’s operations are underpinned by advanced digital and technological tools integrated into platform, which span the entire customer lifecycle for all products. This drives efficiency, enhances customer experience, and fosters sustainable growth.
- Their underwriting and collections efforts enable them to maintain the quality of asset portfolio. They have designed their underwriting processes for a wide variety of product offerings, adopting a customised product-based approach, that includes rule-based underwriting, high touch methods or a combination of both. As a result, their credit costs have remained low, amounting to 0.9 pct of average total net loans (excluding TMFL) in FY25. Post-merger, credit costs were 1.4 pct of average total net loans, in FY25.
- TCL has a well-diversified liability base supported by a credit rating of AAA from CRISIL, ICRA, CARE and India Ratings. Their diversified borrowing mix of short and long-term loans from banks, non-convertible debentures, sub-ordinated and perpetual debt, external commercial borrowings and commercial papers helped them to keep average cost of borrowings to 7.8 pct and total borrowings to total equity ratio to 6.6x FY25.
- Through the merger of TMFL with the company, TCL strengthened their presence in the commercial vehicle and passenger car financing markets. The merger consolidated the lending businesses of company and TMFL, creating a larger unified financial services entity with wider geographical reach, and stronger capital and asset base.
- TCL’s key strategies include (i) Continue growth trajectory by enhancing product offerings and strengthening distribution network (ii) Continue to strengthen risk management framework, credit underwriting and collections infrastructure to maintain high asset quality (iii) Continue to leverage technology and data analytics across the lending value chain to enhance efficiency, reduce costs, improve customer experience and manage risks (iv) Continue to maintain credit ratings and a diversified liability mix to optimise borrowing costs (v) Continue to attract, train and retain talented employees (iv) Harness merger with TMFL to become a full-stack provider of vehicle finance.
- TCL’s Disbursement/gross loans increased 38 pct CAGR/44.7 pct CAGR over FY23-FY25. NII of the company rose 57.2 pct YoY to Rs. 106,901 mn in FY25 where profit rose 16.3 pct YoY to Rs. 36,347 mn. In Q1FY26, NII grew 16.8 pct YoY and profit grew 116.4 pct. NIM’s declined 30 bps YoY to 5.1 pct while average yield stood at 12.2 pct. Gross stage 3 loans ratio and Net stage 3 loan ratio stood fell to 1.9 pct, 1 pct.
Key Risk
- TCL’s fixed interest rate loans comprised 36.3 pct, of total gross loans and fixed interest rate borrowings comprised 55.0 pct of total borrowings. Any adverse changes in interest rates could impact Cost of Borrowings Ratio and adversely impact NIM.
- As an NBFC, TCL is subject to regulations and periodic inspections by regulatory authorities in India. The RBI and NHB have observed certain non-compliances in the past and any non-compliance with such regulations in the future could subject TCL to penalties, restrictions and cancellation of the relevant license.
Financial Performance
| Particulars | FY23 | FY24 | FY25 | Q1FY25 | Q1FY26 |
| Disbursements (Rs. mn) | 747666 | 1049494 | 1423017 | 308041 | 347143 |
| Total Gross Loans (Rs. mn) | 1081968 | 1612311 | 2265530 | 1987867 | 2333956 |
| Interest Income (Rs. mn) | 119109 | 163665 | 257198 | 59952 | 69318 |
| Finance Cost (Rs. mn) | 66006 | 95682 | 150296 | 35412 | 40656 |
| Net Interest Income (Rs. mn) | 53103 | 67982 | 106901 | 24540 | 28662 |
| Fee Income (Rs. mn) | 8140 | 12729 | 23045 | 4083 | 5758 |
| Investment Income (Rs. mn) | 871 | 1591 | 3485 | 1539 | 1839 |
| Total Income (Rs. mn) | 62114 | 82702 | 133357 | 30163 | 36260 |
| Net Total Income (Rs. mn) | 54624 | 71112 | 118029 | 25607 | 30422 |
| Operating Expenses (Rs. mn) | 26650 | 36242 | 56134 | 11810 | 13347 |
| Credit Cost (Rs. mn) | 3182 | 3107 | 5248 | 4617 | 2085 |
| Profit (Rs. mn) | 30293 | 31502 | 36647 | 4617 | 9989 |
| Average Yield % | 11.8% | 11.9% | 12.2% | 12.6% | 12.2% |
| Avg Cost of Borrowings % | 6.9% | 6.9% | 7.8% | 7.2% | 7.8% |
| Net Interest Margin Ratio % | 4.9% | 5.0% | 5.1% | 5.4% | 5.1% |
| Cost to Income Ratio % | 37.9% | 42.0% | 42.1% | 46.8% | 36.8% |
| Credit Cost Ratio % | 0.3% | 0.2% | 0.5% | 0.5% | 0.2% |
| ROE % | 20.8% | 15.5% | 12.2% | 6.3% | 12.5% |
| ROA % | 1.8% | 1.3% | 1.2% | 1.0% | 1.2% |
| Gross Stage 3 Loans Ratio % | 2.5% | 2.1% | 1.9% | 2.0% | 1.9% |
| Net Stage 3 Loans Ratio % | 1.2% | 1.0% | 1.0% | 1.0% | 1.0% |
| Provision Coverage Ratio % | 49.3% | 49.3% | 47.9% | 49.3% | 47.9% |
Peer Comparison Based on FY25
| Particulars | Tata Capital | Bajaj Finance | Shriram Finance | Cholamandalam |
| Total Gross Loans (Rs. mn) | 22,65,530 | 41,66,610 | 26,31,902 | 14,55,720 |
| Interest Income (Rs. mn) | 2,57,198 | 6,11,640 | 4,03,076 | 2,37,477 |
| Finance Cost (Rs. mn) | 1,50,296 | 2,47,710 | 1,84,546 | 1,24,945 |
| Net Interest Income (Rs. mn) | 1,06,901 | 3,63,930 | 2,18,531 | 1,12,532 |
| Fee Income (Rs. mn) | 23,045 | 15,240 | 1,038 | 3,988 |
| Total Income (Rs. mn) | 2,83,697 | 6,97,248 | 4,18,595 | 2,61,528 |
| Operating Expenses (Rs. mn) | 56,134 | 1,23,820 | 53,117 | 13,176 |
| Credit Cost (Rs. mn) | 36,647 | 79,660 | 42,627 | NA |
| Profit After Tax (Rs. mn) | 36,647 | 1,66,378 | 97,611 | 42,627 |
| Avg Cost of Borrowings % | 7.3% | 8% | NA | NA |
| Net Interest Margin Ratio % | 5.2% | 10.4% | NA | NA |
| Cost to Income Ratio % | 42.1% | 34% | NA | NA |
| Operating Expenses Ratio % | 2.7% | NA | NA | NA |
| Credit Cost Ratio % | 1.4% | 1.60% | NA | 2.3% |
| Return On Equity % | 12.1% | 22.1% | NA | NA |
| Return On Assets % | 1.2% | 4.6% | NA | NA |
| Gross Stage 3 Loans Ratio % | 1.9% | 0.4% | 4.6% | 2.5% |
| Net Stage 3 Loans Ratio % | 0.8% | 0.2% | 2.5% | 1.7% |
| Provision Coverage Ratio % | 59% | 54% | 52% | 35% |
Valuation
Tata Capital Limited (TCL), the flagship financial services company of the Tata Group, is a subsidiary of Tata Sons Private Limited and is carrying on business as a non-banking financial company. Tata Capital and its subsidiaries are engaged in providing/supplying a wide array of services/products in the financial services sector and operates across various areas of business: Commercial Finance, Consumer Loans, Wealth Services and distribution and marketing of Tata Cards. Under Tata’s parentage, they have embedded a philosophy of balancing between delivering long-term sustainable growth and profitability. At the upper end of the price band of Rs. 326, the issue priced at P/B of 3.4x on post issue capital. The issue appears to be fully priced. However, considering the pedigree, one could Subscribe in moderation from a longer-term perspective.
Disclaimer: The views shared in blogs are based on personal opinions and do not endorse the company’s views. Investment is a subject matter of solicitation and one should consult a Financial Advisor before making any investment using the app. Making an investment using the app is the investor’s sole decision, and the company or its communication cannot be held responsible for it.
