Do you remember November 2023? Tata Technologies shares jumped 140% on the listing day. Investors who bought at ₹500 saw their money grow to ₹1,200 in just one day. Now, another Tata company is knocking on the stock market’s door. But this time, the story might be quite different.
Meet Tata Capital – the lending arm of India’s most trusted business house. They’re launching a massive ₹15,511 crore IPO starting Monday, October 6th. It’s the biggest public offering of 2025.
But should you get excited? Let’s break it down in simple terms.
What Is Tata Capital? The Financial Engine of the Tata Group
Think of Tata Capital as a one-stop financial supermarket.
Instead of groceries, it offers financial products, including personal loans, home loans, car loans, business loans, and investment assistance.
Founded in 2007, the company has quietly become India’s third-largest Non-Banking Financial Company (NBFC).
In simple terms, NBFCs are like banks’ cousins; they lend money and provide financial services, but they can’t accept savings deposits like banks do.
Tata Capital has posted the highest annualized growth in gross loans between FY23 and FY25, outperforming its NBFC peers.
As of June 2025, Tata Capital:
- Serves 7.3 million customers
- Manages a loan book worth ₹2.33 lakh crore
To picture it better: if ₹2.33 lakh crore were stacked in ₹100 notes, the line would stretch from Mumbai to New York and back — twice.
Tata Capital IPO Details: The Big Picture
Tata Capital plans to raise around ₹15,500 crore from its public issue — a landmark event expected to be among India’s largest NBFC listings in 2025.
The fresh issue money will go to Tata Capital for business growth. The rest (OFS) comes from existing shareholders — mainly Tata Sons and the International Finance Corporation (IFC) — selling part of their stakes.
It’s like a family business expanding while early investors partially cash out.
How Tata Capital Makes Money
Tata Capital generates income by sourcing funds from institutions and markets at competitive rates and extending loans to customers at higher rates. The difference between these rates forms its key earnings margin.
Three Main Segments of Its Business
Interestingly, 98% of Tata Capital’s loan accounts are for amounts under ₹1 crore — showing its focus on common customers rather than just big corporations.
Financial Performance Snapshot
Tata Capital’s numbers show fast growth — but also some challenges.
While revenue and loans grew sharply, profit growth was slower — mainly due to higher costs, provisioning for bad loans, and the merger with Tata Motors Finance in May 2025.
Why Tata Capital Stands Out
- Strong Brand Trust:
For over a hundred years, the Tata brand has stood for integrity and trust in Indian business circles. - Market Scale:
As India’s third-largest NBFC, Tata Capital enjoys a strong presence and reach. - Digital Transformation:
- 98% of customers are digitally onboarded.
- 99% of collections happen online.
- AAA Credit Rating:
This helps the company borrow money at lower rates — a big competitive advantage. - Cleaner Books, Stronger Buffers
Net Stage 3 Loans Ratio is the share of bad loans over 90 days overdue. Tata Capital and Bajaj Finance lead with the lowest ratio of 0.4%, showing strong asset quality. Tata Capital’s higher provision coverage of 74.1% also indicates a more cautious approach compared to most peers.
The Challenges Ahead
- Profitability Gap:
Return on Equity (ROE) at 12.6% trails peers like Bajaj Finance (19.2%) and Cholamandalam (19.7%). - Asset Quality Pressure:
Bad loans (NPAs) have risen after the merger with Tata Motors Finance. - Interest Rate Risk:
Since 64% of its loans are on floating rates, but only 45% of borrowings are floating, income can drop faster than costs when rates fall.
Anchor Investors’ Confidence
Ahead of the IPO launch, Tata Capital secured commitments worth about ₹4,600 crore from 68 major institutional investors, reflecting strong pre-issue demand.
Major Investors Include:
- Life Insurance Corporation (LIC): ₹700 crore
- HDFC MF, ICICI Prudential MF
- Goldman Sachs, Morgan Stanley
- Norway’s Government Pension Fund Global
Their participation signals strong institutional trust, though these investors are locked in for 30–90 days post-listing.
NBFC Sector in India: The Big Context
Non-Banking Financial Companies (NBFCs) are becoming key players in India’s credit system.
In FY25, NBFC credit grew 20%, while banks grew around 12%.
Why NBFCs Are Rising
- Serve customers, banks often avoid (last-mile credit)
- Faster loan approvals
- Tech-enabled operations
- Specialization in specific loan types
However, challenges like tighter RBI rules, rising interest rates, and bad loans in unsecured lending remain.
Grey Market Buzz: Listing Expectations
In the unofficial grey market (unregulated early trading), Tata Capital shares were priced at a ₹7.5 premium over the issue price as of October 5, 2025, implying around 2.3% potential listing gain — modest compared to recent IPOs.
The trend shows cooling expectations for short-term listing pops.
Tata Capital Position Among Peers
Tata Capital stands as the third-largest diversified NBFC in India, maintaining a solid ROE of 12.6% and a Gross NPA of 1.9%, reflecting balanced growth with prudent risk management,though its valuation (P/B) is lower than market leaders like Bajaj Finance and Cholamandalam. This could make it attractive for investors looking at long-term growth potential in a Tata-backed financial entity.
Regulatory Environment & Outlook
In September 2022, the RBI classified Tata Capital as an Upper Layer NBFC — meaning it must follow tighter regulations but also enjoys higher credibility.
Tailwinds Supporting Growth:
- RBI’s removal of higher risk weights on bank lending to NBFCs
- Possible repo rate cuts in FY26
- Expanding credit demand from small businesses
- Lower operational costs through digitization
Still, risks remain from tighter oversight and competition from banks.
Understanding the Risks
The Bigger Picture: Why This IPO Matters
Tata Capital’s IPO is more than a fundraiser — it marks a milestone in India’s financial inclusion journey.
Even today, many individuals in India lack formal credit options. Through its wide reach, Tata Capital supports this underserved population by offering financing for housing, education, and entrepreneurial needs.
The company’s integration with the Tata ecosystem — think financing for Tata Motors cars or loans at Croma stores — gives it a unique edge as India’s economy expands.
Final Word: Just Information, No Recommendation
Tata Capital’s IPO is one of India’s most significant public listings — backed by a trusted brand, solid loan growth, and institutional confidence.
However, while the company shows strong growth and healthy asset quality, it also faces challenges from regulations, interest rate changes, and competition. The modest grey market premium reflects measured expectations.
Whether the IPO fits into your portfolio depends on your own goals, risk tolerance, and timeline.
Remember, this is purely informational — not investment advice. Always read official documents, do your own research, and consult a financial advisor. In investing, your informed judgment is what matters most.
So, would you apply for this IPO? Tell us in the comments…
FAQs
The IPO opens on October 6, 2025, and closes on October 8, 2025. The price band is set at ₹310–₹326 per share, and the retail lot size is 46 shares, requiring a minimum investment of about ₹14,996 at the upper band.
The total IPO size is ₹15,511.87 crore, consisting of a fresh issue of ₹6,846 crore and an Offer for Sale (OFS) of ₹8,665.87 crore by existing shareholders, including Tata Sons and IFC.
The fresh issue proceeds will be used to augment Tier-I capital, support future lending, and meet general corporate purposes. The OFS proceeds will go to selling shareholders and not to the company.
The allotment is tentatively scheduled for October 9, 2025, with refunds and share credit expected on October 10, 2025, and listing on October 13, 2025, on both NSE and BSE, subject to confirmations.
Before the IPO opened, Tata Capital allotted around 14.24 crore shares at ₹326 per share to anchor investors, raising approximately ₹4,642 crore. Key participants included LIC (largest), domestic mutual funds, and global institutions such as Morgan Stanley and Goldman Sachs.
Tata Capital is a diversified NBFC with total gross loans of ~₹2.33 lakh crore, catering to 7.3 million customers. Its loan portfolio mix includes Retail (61.3%), SME (26.2%), and Corporate (12.5%) segments, with a strong digital onboarding footprint.
The information provided in this reference is for educational purposes only and should not be considered investment advice or a recommendation. As an SEBI-registered organization, our objective is to provide general knowledge and understanding of investment concepts.
It is recommended that you conduct your own research and analysis before making any investment decisions. We believe that investment decisions should be based on personal conviction and not borrowed from external sources. Therefore, we do not assume any liability or responsibility for investment decisions made based on the information provided in this reference.
