The Indian stock market is abuzz with the yet-to-happen Initial Public Offering (IPO) of the premium financial services of Tata Group, Tata Capital. This is the first big IPO of the Tata group since Tata technologies had a successful IPO in November 2023 with the updated Draft Red Herring Prospectus (DRHP) having been filed with SEBI.

Tata Capital IPO—Details and Structure

The public offering of Tata Capital is one of the biggest IPOs of financial services in 2025 and on the primary sale of stakes, the firm expects to raise around 18,000-19,000 crore.

IPO Structure Breakdown:

  • Total Shares Offered: 47.58 crore shares
  • Fresh Issue: Up to 21 crore new shares
  • Offer for Sale (OFS): Up to 26.58 crore shares
  • Tata Sons Divestment: Up to 23 crore shares
  • IFC Stake Sale: Up to 3.58 crore shares

Proceeds from the fresh issue will augment Tata Capital’s TIER-I capital base and aid in the growth of future lending activities and operations.

Expected Price Band—Significant Discount Opportunity

Market analysts are predicting the Tata Capital IPO price band to be between ₹375 and ₹450 per share, representing a substantial discount from current unlisted market prices of ₹775-800. This suggests investors could benefit from approximately a 50% discount compared to pre-IPO trading levels.

Price Analysis:

  • Current Unlisted Price: ₹775-800 per share
  • Expected IPO Price: ₹375-450 per share
  • Previous High: ₹1,050 (few months ago)
  • Rights Issue Price: ₹343 per share

Industry experts like Sandip Ginodia of Altius Investech anticipate a strong investor response due to the attractive pricing and limited allotment expectations.

Why Tata Capital Stands Out: Key Strengths

1. Tata Group Legacy and Brand Power

With the support of the 150-year-old Tata Group, Tata Capital has the opportunity of unsurpassed brand recognition and credibility. India has one of the most valuable brands in the world in the form of the Tata Group; the group has a presence in over 100+ countries with a workforce of over one million people.

2. Market Leadership Position

Tata Capital holds the distinction of being India’s third-largest diversified NBFC by total gross loans, offering the most comprehensive lending product suite with over 25 different lending products.

3. Robust Distribution Network

The company’s ‘phygital’ strategy combines:

  • 1,496 branches across 1,102 locations
  • 30,000+ Direct Sales Agents (DSAs)
  • 400 OEM partnerships
  • 8,000+ dealer network
  • 60+ digital partners

4. Superior Asset Quality

Tata Capital has been among the lowest in Gross Stage 3 and Net Stage 3 loan ratios in large NBFCs, with the Gross stage 3 Loan currently at only 1.7 percent as of March 2025.

5. Highest Credit Ratings

The company enjoys AAA/stable ratings from all major domestic agencies and holds international ratings matching India’s sovereign rating, ensuring access to competitive funding.

Tata Capital IPO— Investment Risks to Consider

1. NPA Management Concerns

While Tata Capital maintains low NPA levels, the provision coverage ratio declined from 77.1% in FY23 to 58.5% in FY25, indicating potential stress in asset quality management.

2. Unsecured Loan Exposure

Approximately 21% of total gross loans are unsecured, creating higher risk exposure compared to secured lending portfolios.

3. Interest Rate Sensitivity

With 38.6% fixed-rate loans against 54% fixed-rate borrowings, the company faces potential margin pressure during adverse interest rate movements.

4. Rising Cost of Funds

The average cost of borrowings increased from 6.6% in FY23 to 7.8% in FY25, impacting profitability margins.

Regulatory Timeline—September 2025 Deadline

Under RBI regulations for upper-layer NBFCs, Tata Capital must complete its public offering by September 2025. This regulatory requirement adds urgency to the IPO process and ensures a timely market debut.

Market Expert Opinions

Hitesh Dharawat of Dharawat Securities believes the IPO pricing should align with the rights issue price of ₹343, emphasizing strong investor interest due to the Tata brand and solid fundamentals.

Sandip Ginodia of Altius Investech expects the IPO price range of ₹400-450, noting that limited allotment expectations could drive strong demand.

Recent Corporate Actions

In June 2025, Tata Capital announced a ₹1,751.85 crore rights issue at ₹343 per share with a 1:78 ratio, providing existing shareholders additional investment opportunities before the IPO.

Investment Recommendation

The Tata Capital IPO presents a compelling investment opportunity for several reasons:

Positives:

  • Strong brand backing and market position
  • Attractive pricing with significant discount
  • Diversified loan portfolio reducing concentration risk
  • Proven profitability track record since 2007
  • Superior credit ratings ensuring funding access

Considerations:

  • Monitor provision coverage ratio trends
  • Assess interest rate environment impact
  • Evaluate unsecured loan portfolio performance

Book Running Lead Managers

The IPO is managed by premier investment banks, including

  • Kotak Mahindra Capital
  • BNP Paribas
  • Citigroup Global Markets

Final thoughts

The IPO of Tata Capital will be an ideal chance to buy one of the best diversified NBFCs in India at an inviting price. This IPO would be of great interest to long-term investors due to the strong brand position, the position of leadership of Tata Group in the market, and the projected price discount.

Nevertheless, investors are highly advised to consider the possibilities of risks especially in the management of asset quality and the interest rate sensitivity prior to making investments. Interested investors can expect to be able to lay their hands on what could be one of the most in-demand public offerings of the year, as the regulatory deadline per March 2025 draws near.

Read also: Tata Power Share Price Slips After Q1 FY26 Despite Strong Fundamentals