Can Tata Capital repeat group's last IPO multibagger success?

The Tata Group’s upcoming IPO of Tata Capital is one of the most anticipated listings of 2025. If investors had to go by the strong parentage of Tata and other group stock performances, subscription to the IPO is a no brainer. The most recent listing from the group was a multibagger on debut. Tata Technologies hit the markets in November 2023, debuted at a 140% premium to its issue price. It was the first Tata Group IPO in nearly two decades, and sentiment was euphoric.

But the rally didn’t sustain. Two years on, Tata Tech trades about 43% below its listing price, underlining how quick post-listing corrections can test even marquee names.

Now, all eyes are on Tata Capital, the flagship financial services arm of Tata Sons, which opens its Rs 15,512 crore IPO on October 6. With a price band of Rs 310–326, the offer comprises a fresh issue of Rs 6,846 crore and an offer for sale worth Rs 8,666 crore by Tata Sons and IFC.

A financial powerhouse


Tata Capital is India’s third-largest diversified NBFC, with a gross loan book of Rs 2.33 lakh crore as of June 2025. Its loan mix is tilted towards retail and SME borrowers, who together account for over 87% of the book. The company operates through 1,516 branches and supplements its reach with 30,000 DSAs, 400 OEM tie-ups, and 60 digital partners.

The breadth of products—over 25 lending solutions ranging from personal loans and home finance to vehicle, SME, and infrastructure loans—gives Tata Capital an edge in diversification. Post its merger with Tata Motors Finance, the firm has expanded further into vehicle finance.

Strengths and stability


Backed by the Tata brand, the company enjoys top-tier credit ratings—‘AAA/stable’ from leading agencies. This translates into competitive borrowing costs (7.8% average in FY25). Asset quality is among the best in its segment, with gross NPAs at 2.1% and net NPAs at 1% as of June 2025.

Financially, the company posted Rs 25,720 crore in interest income in FY25, up from Rs 16,366 crore in FY24. Net profit rose to Rs 3,655 crore, compared with Rs 3,327 crore the previous year. Net interest margins improved to 5.6%, while return ratios moderated post-merger but remain healthy (RoE at 12.6%, RoA at 1.8%).

Risks and competition


Despite its scale, Tata Capital faces intense competition from NBFC giants like Bajaj Finance and Shriram Finance. Its return ratios are lower than peers—Bajaj Finance’s RoE stands at 19.2% versus Tata Capital’s 12.6%. Analysts also flag risks from high exposure to unsecured loans (20% of the book), possible asset-liability mismatches, and sensitivity to interest rate cycles.

Should investors bet?


Analysts remain positive but measured. SBI Securities notes that Tata Capital’s strength of its parentage, diversified portfolio and omni-channel distribution make it a stable long-term play. Kunvarji Wealth, meanwhile, highlighted the company’s strong brand equity, growth trajectory and robust risk management framework.

However, both point out that valuations -- at 3.4 times post-issue book value -- are not cheap. Returns will hinge on how the company integrates its vehicle finance business and sustains profitability amid competition.

The big question


For investors, the Tata brand brings comfort. But as Tata Technologies showed, a blockbuster listing doesn’t always ensure lasting gains. Tata Capital’s IPO may not deliver the fireworks of Tata Tech’s debut, but with its scale, brand trust and improving fundamentals, it positions itself as a steadier, more long-term bet.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)