Management

• Saurabh Agrawal (Chairman and Non-Executive Director)
• Rajiv Sabharwal (Managing Director and CEO)
• Sujit Kumar Varma (Independent Director)
• Nagaraj Ijari (Independent Director)
• Dr. Punita Kumar Sinha (Independent Director)
• Ramanathan Viswanathan (Independent Director)
• Geetha Ravichandran (Additional and Independent Director)
• Ankur Verma (Additional and Non-Executive Director)
• Rakesh Bhatia (Chief Financial Officer)

Use of Proceeds

The total issue size is Rs. 15,511.87 cr, which comprises a fresh issue of Rs 6,846.00 cr and offer for sale (OFS) of Rs 8,665.87 cr. Tata Capital intends to utilize the net proceeds from the issue towards Augmentation of the company’s Tier – I capital base to meet the company’s future capital requirements including onward lending.

Competitive Strengths

Flagship Financial Services Company of the Tata Group, with a Legacy of Over 150 Years Tata Capital is the flagship financial services arm of the Tata Group, one of India’s most distinguished business conglomerates with a legacy of over 150 years. The Tata Group operates through its holding company, Tata Sons Private Limited, across ten verticals including automotive, technology, steel, financial services, aerospace and defence, and consumer and retail. As of March 31, 2025, it had operations in more than 100 countries across six continents, employing over one million people. With 26 equity-listed companies and a total market capitalisation of Rs 27.8 trillion, the Tata Group was recognised by Brand Finance as India’s most valuable brand in 2025.

Strong Group Ecosystem and Financial Services Presence The Tata Group maintains a strong presence in financial services through multiple entities, including Tata AIA Life Insurance Company Limited, Tata AIG General Insurance Company Limited, and Tata Asset Management Private Limited. Tata Capital benefits from its association with over 70 group companies and more than 950 dealer and vendor partners. Tata Sons Private Limited, the promoter and holding company, has infused Rs 89.7 billion in equity since the inception of Tata Capital’s lending operations in 2007 and holds 88.6% of its equity shareholding. The group’s extensive ecosystem provides strategic synergies across financing, insurance, asset management, and distribution, enhancing Tata Capital’s reach and operational capabilities.

Third Largest Diversified NBFC in India with a Comprehensive Product Suite Tata Capital ranks as the third-largest diversified non-banking financial company (NBFC) in India, with total gross loans amounting to Rs 2,334 billion as of June 30, 2025. Its material subsidiary, Tata Capital Housing Finance Limited (TCHFL), achieved total gross loans of Rs 711.5 billion, growing at a CAGR of 32.6% from March 2023 to March 2025. Tata Capital offers over 25 lending products to a broad customer base including salaried and self-employed individuals, entrepreneurs, SMEs, and corporates. The loan ticket sizes range from Rs 10,000 to over Rs 1 billion. The portfolio is diversified across customer categories, sectors, and geographies, ensuring that no single product contributes more than 20% of total gross loans, thus minimizing concentration risk and maintaining stability across business cycles.

Omni-Channel Distribution Model Combining Physical and Digital Presence Tata Capital operates an omni-channel distribution model that integrates its extensive physical presence with digital and partnership-based networks. As of June 30, 2025, it had 1,516 branches across 1,109 locations in 27 states and union territories. These branches are supported by over 30,000 direct selling agents, 400 OEMs, 8,000 dealers, and 60 digital sourcing partners. The company’s mobile applications had over 21.9 million downloads and its website attracted 75.8 million visits in FY25. Equipped with digital tools, its sales teams and partners manage customer acquisition, servicing, and collections efficiently. The model allows assisted and self-service loan journeys, ensuring seamless engagement and improved customer convenience across touchpoints.

Prudent Risk Management and Stable Asset Quality Tata Capital’s prudent risk culture and advanced analytical systems have supported strong asset quality, with one of the lowest Gross and Net Stage 3 loan ratios among large NBFCs in India. Its risk management framework covers credit, market, operational, and information security risks, supported by advanced data analytics and early-warning systems. The underwriting team functions independently, using both rule-based and high-touch credit assessment methods. Machine learning and predictive analytics are integrated into collections to monitor repayment trends and optimize recoveries. As of June 30, 2025, the company had deployed over 80 predictive models across its collection systems, ensuring strong performance, low credit costs, and a customer-focused approach to recovery.

Peer Comparison

Key Risks & Concerns

Non-Performing Loans and Customer Defaults Customer defaults from bankruptcy, unemployment, or economic downturns remain a major risk. Gross Stage 3 Loans rose to 2.1% (June 30, 2025) from 1.9% (March 31, 2025), while Net Stage 3 Loans stood at 1.0%. Rising defaults could weaken cash flows, pressure profitability, and impact overall financial health.

Inadequate Provisioning for Bad Loans Provision Coverage Ratio declined to 53.9% as of June 30, 2025, from 77.1% in March 2023, reflecting reduced reserves for potential credit losses. Lower provisioning may limit the ability to absorb future defaults, increasing vulnerability to asset quality deterioration and negatively affecting capital adequacy and investor confidence.

High Exposure to Unsecured Loans Unsecured Gross Loans formed 20.0% or Rs 467,063.2 million of Total Gross Loans as of June 30, 2025. These loans, lacking collateral, carry higher default and recovery risks. Elevated exposure could lead to increased delinquencies during economic stress, adversely affecting profitability and overall asset quality if not managed prudently.

Outlook and Valuation

Tata Capital Limited is positioned as one of India’s leading diversified NBFCs, backed by the 150-year legacy and brand strength of the Tata Group. The company, with Total Gross Loans of Rs 2,334 billion as of June 30, 2025, operates across retail, SME, and corporate segments, supported by a wide “phygital” network integrating physical branches and digital platforms. Advanced technology adoption, including AI, ML, and GenAI, has enhanced operational efficiency, risk monitoring, and customer experience. The merger with Tata Motors Finance strengthens its vehicle finance portfolio, positioning it as a full-spectrum auto financier with diversified product offerings across commercial and passenger segments.

The company’s outlook remains supported by macroeconomic tailwinds such as India’s sustained GDP growth, rising consumer credit demand, and accelerating digital adoption. Strong credit ratings (AAA domestic, BBB international) ensure access to low-cost capital, while diversified funding sources safeguard liquidity. Tata Capital aims to expand its retail lending portfolio, including affordable housing and SME finance, and deepen partnerships with DSAs, OEMs, and dealers to enhance penetration. The company continues to prioritize risk management and asset quality through analytics-driven underwriting and machine learning-based collection systems, ensuring resilience against regulatory or interest rate fluctuations in the evolving financial ecosystem.

Tata Capital’s upcoming IPO represents both a regulatory milestone and a growth enabler for capital augmentation. Proceeds from the issue will enhance Tier-1 capital adequacy, support lending expansion, and enable investments in high-growth sectors such as green finance and sustainable energy. Despite short-term profitability pressure following the Tata Motors Finance Limited merger, earnings normalization is expected as integration benefits materialize. The company’s robust governance framework, strong parent backing, and diversified business mix offer long-term scalability. Positioned to capitalize on India’s evolving credit landscape, Tata Capital stands out as a technologically advanced and customer-centric financial services institution. At the upper end of the price band, the issue is valued at 4.1x P/BV (post-issue) based on FY25 BVPS. We believe IPO is reasonably priced. Aggressive investors can SUBSCRIBE to the issue for the long term.