Tata Capital IPO: Should you invest in 2025’s Biggest IPO?

7 minutes read

30 Sept 2025

Tata Capital’s ₹15,511 crore IPO opens October 6–8 with a price band of ₹310–₹326 per share, valuing the company at over ₹1.39 lakh crore. Backed by Tata Group, this is India’s largest IPO this year and strengthens Tata Capital’s expansion as a leading diversified NBFC.

IPO

Introduction

2025’s biggest IPO is finally here! Tata Capital’s much-awaited ₹15,511 IPO is set to open on 6th October 2025 and is posied to be the one of the largest IPOs of India. Backed by the trusted Tata Group, this isn’t just another NBFC listing. It’s a chance for investors to own a slice of the Tata financial legacy.

A subsidiary of Tata Sons, Tata Capital started in 2007 with a promise to make finance simple. This one-stop financial powerhouse offers everything from personal and home loans, SME financing, vehicle loans to wealth management. Today, with a loan book of over ₹2.25 lakh crore and profits crossing ₹3,600 crore in FY25, it is India’s third largest NBFC as per its prospectus. Now, the company is opening its doors to the public, inviting investors to be part of its next big growth chapter.

Is this mega-IPO worth investing in? Let’s deep dive into the company’s business, financials, peer comparison, and valuation as disclosed in the draft red herring prospectus (DRHP) to evaluate if this IPO deserves to be added to your portfolio.

Tata Capital IPO Details

Tata Capital IPO is the second IPO by the Tata Group in over 20 years. So why did the company plan this IPO now? Tata Capital is regulated by the Reserve Bank of India (RBI). The RBI has classified Tata Capital as an ‘Upper Layer’ NBFC and directed it to be mandatorily listed on the stock market by September 2025. That makes this IPO both a regulatory requirement and a strategic strength for the company.

Here’s everything you need to know about the issue:

IPO Date: October 6 to October 8, 2025

Price Band: ₹310 to ₹326 per share

Issue Size: ₹15,511.87 crore (Fresh Issue: ₹6,846 crore + OFS: ₹8,665.87 crore)

Lot Size: 46 shares per lot

Retail Investors: Min investment ~₹14,996

sNII: 14 lots / 448 shares (~₹1.96–2.09 lakh)

bNII: 67 lots / 2,144 shares (~₹9.43–10.03 lakh)

Lead Managers: Kotak Mahindra Capital, Citi, BofA Securities, Axis Capital, ICICI Securities, SBI Capital

Allotment Date: October 10, 2025

Listing Date: October 14, 2025 (BSE & NSE)

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About Tata Capital

Tata Capital is diversified financial services arm of the $150 billion Tata Group, catering to individuals, businesses, and corporates. Tata Sons holds ~88–92% stake pre-IPO.

The broad suite of financial services offered by the company includes:

Retail loans – personal loans, housing loans, vehicle finance

Corporate and commercial finance – working capital, business loans, infrastructure funding

Wealth management & advisory – wealth management, insurance distribution, and third-party financial products

Sustainable Finance: Funding for green/renewable projects via Tata Cleantech Capital.

Unlike most lenders, the company’s diversified business model makes it resilient across economic cycles, as highlighted in its DRHP. It boasts top AAA ratings from CRISIL, ICRA, and CARE, with a diversified funding base to support growth.

At its core, Tata Capital earns from interest income on loans, supplemented by fees and distribution income (insurance, wealth, credit cards). Its growth depends on keeping funding costs low, managing risks, and maintaining solid asset quality. The company’s retail credit business accounts for 88-90% of its overall loan book. However, its asset quality is strong, and it is diversified across lending sectors that enables effective risk management and scalability.

Industry Outlook

India’s credit market is booming: Rising demand for personal, SME, and housing loans is creating huge opportunities for NBFCs.

But there are challenges too:

Competition: Big NBFCs and banks are fighting hard for market share.

Regulation: RBI’s upper-layer tag means stricter compliance, though it also improves credibility.

Asset Quality Risks: Macroeconomic shocks or high interest rates could test NPAs.

Overall, the industry backdrop looks positive, but execution will be key.

Now Here’s Where It Gets Interesting

Some of the angles / talking points that make the Tata Capital IPO particularly noteworthy:

Size & Scale: Tata Capital IPO is one of the largest IPOs in India’s financial sector and is the fourth biggest IPO in the country ever.
Discount vs Unlisted Shares: The IPO price band (₹310-₹326) is significantly lower (~55-56% discount) compared to where Tata Capital’s unlisted shares were trading, which has raised expectations and some concern among pre-IPO investors.
Valuation Concerns vs Peers: Metrics like ROE (~12%), ROA (~1.7%), price-to-book (P/B) multiple (estimates ~8.5-9×) are lower/higher versus best NBFCs (which may have higher ROE/ROA or lower P/B) — implies a premium being asked.
Regulatory Mandate Driving Timing: The issuance is not only business-growth driven but also compliance-driven (upper-layer NBFC listing requirement).
Growth / Asset Quality Trade-off: While loan book is growing fast at a ~ 37% CAGR over the last two years and income is rising, the cost of scaling (credit risk, funding cost) will weigh heavily in the next few quarters.

Tata Capital Financials

When it comes to evaluating any investment, a company’s financials are very important. Here’s an overview of Tata Capital revenue and profit:

(values in ₹ Crore)	FY23	FY24	FY25	Growth (FY24 to FY25)
Revenue	₹13,637	₹18,198	₹28,370	+55.9%
PAT (Profit)	₹2,946	₹3,327	₹3,655	+9.9%
Gross Loans (AUM)	₹1.20 Lakh	₹1.57 Lakh	₹2.21 Lakh	~40%

In FY25, Tata Capital’s revenue surged 56%, profit grew 10%, and the loan book expanded by 40% — showing aggressive growth and rising demand for its services.

Strengths of Tata Capital

Tata brand trust: Strong promoter backing builds investor and customer confidence.

Diversified offerings: Retail, SME, housing, infrastructure, and wealth management.

Loan book momentum: ~37% CAGR between FY23–FY25.

Asset quality in check: GNPA at ~1.9%, NNPA at ~0.8%.

Steady profitability: NIM ~5.2%, ROE ~12%.

Wide Distribution Network – Extensive reach across retail, corporate, and SME segments, supported by Tata’s strong brand and technological capabilities.

Risks to Watch Out For

Credit risk: Loan defaults could rise if the economy slows.

Regulatory compliance: Stricter RBI norms may increase costs.

️ Competition: Banks, fintechs, and NBFC peers are all fighting for the same pie.

️ Interest rate swings: Can squeeze lending margins.

️ Dependence on funding: Needs continuous access to low-cost capital.

Peer Comparison & Valuation: Is the Price Justified?

Here’s a look at Tata Capital’s peers from its DRHP:

Company	AUM (in Cr)	FY25 PAT (in cr)	EPS	P/B	P/E	ROE
Tata Capital	₹2,20,000	₹3,655	₹9.30	4.5	~35	11.2%
Bajaj Finance	₹2,55,000	₹16,779	₹26.89	5.6	~35.4	17.3%
Cholamandalam Finance	₹1,60,000	₹2,850	₹50.72	5.1	~30	18%
Shriram Finance	₹2,30,000	₹9,576	₹50.82	2.0	~14	16.8%
HDB Financial	₹70,000	₹2,200	₹27.4	3.8	N/A	14.6%

Tata Capital has priced its IPO at 4.5 times its book value (P/BV). This is slightly higher than the industry average of 4.1 times, but still lower than leading players like Bajaj Finance (5.6x) and Cholamandalam (5.1x).

Tata Capital’s revenue stands at ₹28,312 crore—about half of Bajaj Finance’s much larger ₹69,683 crore. In terms of business scale, Bajaj Finance leads by a wide margin, but Cholamandalam Investment and Finance is the closest rival to Tata Capital in revenue generation at ₹25,846 crores. While the company ranks as the third largest NBFC in India, in terms of AUM, which is at ₹2,20,000 crores, next only to Bajaj Finance and Shriram Finance.

Tata Capital’s earnings per share (EPS) is ₹9.3 — the lowest among the big names like Bajaj, Shriram, and Chola, who report EPS in the range of ₹26 to ₹50. This signals that Tata Capital must sharpen its operational efficiency and profit margins to boost its per-share earnings and catch up with leading peers.

At the upper band of ₹326, Tata Capital IPO is valued at ~35x P/E, which is also at a premium compared to the industry average (24.3x). The company’s EPS stands at ₹9.3, lowest among peers, vs ₹26–50 for others.

Outlook & Recommendation

The IPO price looks a bit expensive at first glance. However, considering Tata Capital’s strong position as India’s third-largest diversified NBFC long-term investors with a high-risk profile can consider investing.

In short, while the stock isn’t being offered at a bargain, it strikes a balance — giving investors both the possibility of quick gains in the short term and solid growth potential in the long run, thanks to India’s expanding financial services sector.

If you are investing in listing gains, given the IPO is at a much discounted price compared to its unlisted price it can be a good opportunity. However, wait for Anchor Book and subscription data as strong demand (QIB, NII) could drive listing gains.

Final Thoughts

Tata Capital’s IPO is big, ambitious, and backed by one of India’s most trusted names. Growth numbers are impressive, but efficiency metrics like ROE and EPS still lag peers. For short-term investors, listing gains are possible if demand is strong. For long-term believers, it’s about whether Tata Capital can deliver on scale and profitability in the coming years.