The initial public offering (IPO) of Tata Capital, which is the biggest primary issue of 2025, was off to a muted start on Monday as the issue was overall subscribed 21 per cent in the first two hours of bidding.
According to the data from BSE, investors made bids for 6,95,73,988 equity shares for the 33,34,36,996 equity shares offered in the IPO as of 11.30 am on October 6.
On an individual basis, qualified institutional bidders led the bidding with their quota subscribed a 29 per cent, while retail investors’ portion was booked 19 per cent. Allocation for non-institutional investor was subscribed only 13 per cent, while quota for eligible employees was subscribed more than 60 per cent as of the given time.
Tata Capital is raising a total of Rs 15,511.87 crore from its IPO, offering its shares in the price band of Rs 310-326 apiece. Bids can be made for the issue in the multiples of 46 equity shares, until Wednesday, October 08. Allotment for the issue shall be done on Thursday, October 09 and listing will be done on next Monday, October 13.
Brokerage firms are mostly positive on Tata Capital IPO, suggesting to subscribe to it for long-term citing its strong parentage and better asset quality. However, its return ratios may take a hit post-merger with Tata Motors Finance (TMFL). The issue is priced in line-with peer, closer to recently listed HDB Financial Services, which was listed earlier this year, raising a total of Rs 12,500 crore.
Tata Capital’s valuation appears fair when compared with peers such as Bajaj Finance, Shriram Finance, L&T Finance, HDB Financial, and Cholamandalam, which trade at an average P/BV multiple of around 4.1 times FY25.It metrics are below the peer average due to lower NIMs but the ongoing integration of TMFL, it benefits from superior asset quality and strong parentage, said Nirmal Bang Securities.
“Considering its improving growth visibility and stable credit performance, Tata Capital merits a valuation of 3.8x FY25 P/BV, implying a moderate 10 per cent discount to peers. Backed by its diversified portfolio, prudent risk management, and expected profitability improvement post-merger, we assign a ‘subscribe’ rating with a long-term positive outlook,” it added.
Tata Capital has reported steady growth in interest income on the back of loan book expansion and widening branch network across India. However, its RoE and RoA remain lower than peers, which is a concern, said Choice Broking in its IPO note.
“Backed by a strong brand and the proposed merger with TMFL that will enhance its customer base, the company is well-positioned for long-term growth. However, considering the near-term operational challenges, we assign a ‘subscribe for long term’ rating to the issue,” it added.
“With a wide product portfolio covering retail, SME, housing, and corporate finance, as well as non-lending businesses such as wealth management and fund management, Tata Capital enjoys strong synergies within the Tata Group ecosystem and a diversified funding base,” said Master Capital Services, suggesting this IPO as a potential long-term investment opportunity.
Tata Capital has seen a marginal improvement in grey market premium (GMP), but the listing prospect remained muted. Last heard, it GMP jumped to Rs 10 apiece, suggesting a 3 per cent listing pop for the investor. However, its premium in the unofficial stood around Rs 7-9 over the weekend.
Post the merger with TMFL, the credit costs have increased resulting in RoA declining and along with lower RoE, Normalization of credit costs in the vehicle finance portfolio along with realization of business synergies would be key to achieving higher return ratios of 15 per cent RoEs-similar to peers like HDB Financial currently trading at 3.5 times June 2025 BVPS, said Antique Stock Broking.
Tata Capital’s AUM growth at 37.3 per cent CAGR in FY23-25, reflects scalability; strong risk management with resilient underwriting standards and 80 per cent secured book aids steady asset quality; and robust branch network enables to tap growth opportunities, said ICICIDirect.
“Tata Capital offers a resilient business model with a focus on sustained growth supported by a diversified asset mix. It currently commands a valuation of 3.5 times P/B on post issue basis,” it added without rating the issue. ICICIDirect said that substantial proportion of unsecured loans and growing NTC customers pose underwriting risk resulting in volatile performance.
Tata Capital combines the strength of its Tata Group parentage, a diversified loan portfolio, robust risk management practices, and a pan-India omni-channel network to position itself as one of the most reliable and scalable NBFCs in India, said SBI Securities.
“The recent TMFL merger further expands its presence in vehicle finance, adding scale and product diversity. During FY25 and 1QFY26, RoE and RoA have dipped due to losses from TMFL on a post-merger basis impacting profitability, which is expected to reverse in the future as the TMFL business turns profitable,” it added
Tata Capital’s robust risk management framework enables it to navigate evolving market conditions, customer expectations, and regulatory changes. The company remains focused on maintaining high asset quality by continuously enhancing its risk practices, credit underwriting, and collections infrastructure, as it grows the loan portfolio, said Ashika Stock Broking.
“The company plans to refine its underwriting using advanced analytics and data-driven insights for better credit decisions. Simultaneously, the company will optimize its analytical models and digital tools to improve risk assessment and collection efficiency, thereby safeguarding the quality of its loan portfolio,” it added.