of Tata Capital Ltd. (TCL), the flagship financial services arm of the Tata Group, has received largely positive recommendations from brokerage houses, with most assigning a subscribe rating for the long term, citing the company’s robust growth, strong asset quality and the unmatched credibility of its parentage.
The IPO, which opened today, October 6, 2025, and ends on October 8, 2025, aims to raise up to ₹15,512 crore at the higher price band of ₹326 per share.
The Tata advantage and market dominance
Brokerages have consistently highlighted the fundamental strength derived from the Tata brand. The company is India’s third-largest diversified Non-Banking Financial Company (NBFC), managing a robust loan book of ₹233 lakh crore as of June 30, 2025, according to Ashika, LKP Research and BP Wealth.
TCL is classified as an ‘Upper Layer NBFC’ by the RBI. Aditya Birla Money highlighted that the company benefits from the strong Tata brand, recognized by the Brand Finance India 100 2025 report as the most valuable brand in India, ensuring the lowest cost of funds in the industry and bolstering customer trust.
This credit strength is reflected in its AAA domestic rating from major agencies including CRISIL, ICRA, CARE, and India Ratings, as noted by LKP Research, BP Wealth and Canara Bank Securities.
TCL, among the fastest-growing large diversified NBFCs, recorded total gross loans growth at a compounded annual growth rate (CAGR) of 37.3 per cent between FY23 and FY25, according to Anand Rathi, Ashika, and BP Wealth.
Digital-first operations and superior asset quality
Analysts praised Tata Capital’s approach to technology and risk management. The company offers a comprehensive suite of over 25 lending products across retail, SME, and corporate segments, ensuring diversification; no single lending product contributes more than 20 per cent of total gross loans.
Retail and SME customers form the primary focus, accounting for 87.5 per cent of the total gross loans as of June 30, 2025. Furthermore, the loan portfolio is highly granular, with over 98 per cent of loan accounts having a ticket size below ₹10 million, as highlighted by Ashika and BP Wealth.
Tata Capital utilises an omni-channel ‘phygital’ distribution model, combining over 1,500 branches with a strong digital ecosystem. Digital onboarding is high, with Ashika and Canara Bank Securities noting that over 97 per cent of customers were onboarded digitally in fiscal 2025.
The company’s asset quality metrics are considered strong among large NBFCs. As of June 30, 2025, the Gross Stage 3 Loans Ratio stood at 2.1 per cent, and the Net Stage 3 Loans Ratio was 1.0 per cent. This is attributable to TCL’s agile and responsive risk function, utilising advanced analytical tools, including over 80 predictive analytical models deployed across collections, noted BP Wealth and Anand Rathi.
Ventura stated that TCL maintains one of the lowest GNPA ratios among large NBFCs. The merger with Tata Motors Finance Ltd. (TMFL), effective May 8, 2025, strategically positions the combined entity as a leading, full-spectrum provider of vehicle finance, enhancing scale and product offerings, LKP Research highlighted.
Valuation and key risks
Despite the overwhelming subscription calls, concerns centered on valuation and specific credit risks. Deven Choksey Research assigned a “NEUTRAL” rating, observing that the issue is priced at 4.1x TTM P/B, which is higher compared to a peer average of 3.7x TTM P/B. The firm also noted that while growth is expected to be healthy, the returns profile (RoA of ~1.9 per cent) appears low compared to the peer average RoA of ~3.0 per cent.
Canara Bank Securities, however, viewed the IPO pricing at 4x FY25 P/B as in line with peers. ICICI Direct assigned an “unrated” rating but calculated the valuation at approximately 3.5x P/B on a post-issue basis (excluding ESOP).
Common risks flagged by multiple brokerages include:
- Unsecured Loan Exposure: Unsecured loans accounted for approximately 20 per cent of Total Gross Loans as of June 30, 2025, according to Canara Bank Securities, ICICI Direct, Aditya Birla Money, and Kunvarji. These loans inherently carry higher credit risk.
- Provisioning Buffer: The Provision Coverage Ratio (PCR) has declined to 53.9 per cent as of June 30, 2025 (down from 77.1 per cent in FY23), reducing the cushion against potential credit losses, noted ICICI Direct, Ashika, and Anand Rathi.
- Interest Rate Volatility: ICICI Direct and Canara Bank Securities noted that fluctuations in interest rates could impact Net Interest Margins, especially since 36.3 per cent of loans and 55.0 per cent of borrowings were at fixed rates as of June 30, 2025.
Lakshmishree concluded that the IPO provides a compelling opportunity, emphasizing that the fresh issue proceeds will strengthen Tier-1 capital, providing necessary fuel for onward lending and aggressive expansion. Ventura concluded that the company is well-positioned to sustain growth momentum in India’s expanding financial ecosystem.