Tata Capital IPO: Is this the biggest investment opportunity of 2025?
Whenever the Tata Group’s name is mentioned, investors are filled with trust and excitement. Now, the Tata Capital IPO, opening on October 6, 2025, is once again set to take the market by storm. Retail investors are highly excited about this IPO, as it represents the flagship financial services arm of Tata Sons. But the question is: will this IPO deliver the returns expected? Or is it just the magic of a brand name?
The Story and Origin of the Tata Capital IPO
Launched in 2007, Tata Capital was born with a simple mission—to provide financial services to retail customers, SMEs, and corporates. Gradually, it expanded its network to become not just another NBFC (Non-Banking Financial Company), but India’s third-largest diversified NBFC.
Today, Tata Capital has a loan book of ₹2.33 lakh crore and is now launching its IPO of ₹15,512 crore. Of this, ₹8,666 crore is an offer for sale, in which Tata Sons and International Finance Corporation will slightly reduce their stake. The remaining ₹6,846 crore will be a fresh issue, which will remain with the company and strengthen its Tier-I capital. According to RBI regulations, this is a kind of financial cushion that helps absorb the company’s risk.
Financial Highlights of the Tata Capital IPO
In the world of numbers, Tata Capital’s results appear quite strong. Tata Capital impressed everyone with its performance in FY25. The revenue of the company was ₹28,300 crore, with an incredible growth story having a CAGR of 44% over only two years. Profits also consistently improved and ended at ₹3,655 crore, which evidently indicates that the business is on a stable and sustainable path.
But not everything is so rosy. Net Interest Margin (NIM), an important metric for the lending business, is 5.2% for Tata Capital, while companies like Bajaj Finance and Shriram Finance have margins around 9.5–10%. This means that Tata Capital lags slightly behind its peers.
Return ratios also confirm this story. Tata Capital’s ROE is 12.6% and ROA is 1.8%, while competitors are delivering averages around 16% and 3.2%.
Strengths that set the Tata Capital IPO apart
Nevertheless, Tata Capital has some strengths that could attract investors. Most importantly, it is part of the Tata Group, which naturally carries trust and credibility. The company has an AAA/Stable credit rating, which maintains borrowing costs at 7.8%.
Asset quality has also remained quite good. Gross Stage 3 loans are stable between 1.5–2%, while the industry average is 2.6%. The company has further strengthened its position after the merger with Tata Motors Finance.
This deal has given Tata Capital a powerful presence in the vehicle finance segment. The loan book of the company is now more diversified with 87% being from retail and SME borrowers. This composition clearly reflects robust retail-led growth, which will be good for the stability of the company in future.
Risk Factors That Cannot Be Ignored
The bigger the IPO, the greater the risks. Tata Capital’s unsecured loans currently account for more than 20% of its portfolio. This means that if borrowers default, both asset quality and profitability could be pressured.
Another concern is legal overhang. There are 283 criminal cases pending against the company, related to loan disputes and repossession issues. Their contingent liability reaches ₹765 crore, which is a warning signal.
And the biggest question is valuation. The Tata Capital IPO has a top-end price of ₹326 per share. In terms of valuation, the IPO appears to be priced at a slight premium. Based on current numbers, Tata Capital’s P/E is 33x and P/B is 4.2x. Compared to industry peers, they trade at 27.2x and 3.6x. This makes the IPO a bit pricey.
Is the Tata Capital IPO right for investors?
If you’re looking for short-term listing gains, this IPO may not make as big a splash as Tata Technologies did in 2023. That IPO had drawn a 140% premium, but now it’s down 43% from its listing.
But if you’re a long-term investor and have faith in the Tata Group, the Tata Capital IPO may be a safe and secure choice. The company’s fundamentals, diversified portfolio, and brand backing make it a sure shot, even if valuations are on the higher side.
Market experts are also saying the same thing—this IPO may not be a fireworks show, but could become a steady, compounding story.
Final Words on the Tata Capital IPO
The market is already flooded with IPOs, and the decision isn’t easy for investors. But one thing is clear with Tata Capital: this isn’t a short-term gamble, but an opportunity for long-term financial growth. The company’s solid credit ratings and improving financials make this IPO an attractive option for long-term investors. But always remember that there are no guarantees in the stock market.
Every IPO carries risks. Therefore, it is important to understand your financial goals and risk appetite before making a decision.
Disclaimer:
The views and recommendations above are those of individual analysts or brokerage companies, not US News Weeks. We advise investors to check with certified experts before making any investment decisions.
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