Tata Capital IPO GMP Grey Market: Is the Tata Premium Really Justified?
The most talked-about topic in India’s financial markets right now is the Tata Capital IPO GMP grey market. The IPO of this flagship NBFC company of the Tata Group opened on October 6th, and is considered the largest issue of 2025. There’s both excitement and confusion surrounding this IPO—some are calling it a “once-in-a-decade opportunity,” while some experts say the valuation is already at a premium. But the question is—is the Tata Capital grey market premium truly justified, or is it simply the brand name?
What’s going on in the Tata Capital IPO GMP grey market?
The IPO size is approximately ₹15,500 crore, and the price band is set at ₹310-326 per share. According to market analysts, the post-issue valuation will be around ₹1.38 lakh crore. As of now, the Tata Capital IPO GMP premium is moderate in the grey market, which suggests that not much “instant gain” is expected after listing, but it can be a stable play for long-term investors.
Tata Capital is a diversified NBFC with a strong retail and SME base – its consolidated loan book reached ₹2.33 lakh crore as of June 2025, with 87.5% retail and SME portfolio. Growth pace is strong—the company expanded at a 37% CAGR from FY23 to FY25. This clearly shows that Tata Capital is aggressively building its retail base, especially through its “phygital” model, which has 1,500+ branches and 30,000 partners.
Valuation: Fair or Slightly Overpriced?
Analysts say Tata Capital’s IPO valuation is slightly on the high side. At the upper end, the company’s price-to-book ratio is 3.4x-4.1x and price-to-earnings ratio is around 32x—which is comparable to NBFCs like Bajaj Finance and Aditya Birla Capital. According to Deven Choksey Research, the company is “fairly valued” with a P/B of 4.1x, but its RoA (Return on Assets) is only 1.9%, while its peer average is around 3%.
SBI Securities said this valuation is at the “upper end of the fair range,” as near-term profitability may be under some pressure after the Tata Motors Finance merger. ICICI Direct, on the other hand, says Tata Capital is a “well-capitalized and prudently managed” NBFC with unmatched governance and parentage.
Tata Capital vs. Bajaj Finance: Which is the Better Play?
Comparing Tata Capital to Bajaj Finance clearly shows the difference in profit margins and return ratios. Bajaj Finance’s ROE is approximately 4.6%, while Tata Capital’s is only 1.8-1.9%. Tata Capital’s return on equity (ROE) is also 12-13%, while Bajaj Finance delivers up to 19%.
Yet, Tata Capital‘s valuation in the gray market is almost at its peer level, which speaks volumes: investor confidence. The market trusts Tata Capital because of its brand name and governance under the Tata Group. This “Tata premium” creates a psychological safety cushion for investors, keeping demand strong even if short-term returns are moderate.
Governance Comfort or Earnings Power?
Experts say that Tata Capital‘s premium comes from governance comfort, not earnings superiority. According to ICICI Direct, the company’s AAA domestic and BBB- international ratings have kept funding costs very low – a major advantage in the NBFC industry. Therefore, the market is looking at it as a “safe compounder”, where stability is guaranteed even if high growth is not.
On the other hand, Deven Choksey Research says that “returns appear low” compared to peers, and investors should view this IPO as a stability play – not a short-term alpha bet. Meaning, if you want listing day profits, there is limited scope. But if you have a 3-5 year horizon, Tata Capital could be a strong long-term compounder.
Institutional Support and Listing Outlook
Even before the IPO opened, Tata Capital had raised ₹4,642 crore from anchor investors. This included major names like LIC, Morgan Stanley, Goldman Sachs, and Amansa Holdings. Eighteen domestic mutual funds subscribed for more than ₹1,650 crore—clearly demonstrating the strong trust of institutional investors.
But there’s a downside—when such a large portion has already gone to anchors and institutions, retail listing gains are limited. That is, short-term traders should not expect to get much “grey market” premium.
Final Verdict: Is Tata Capital IPO worth the grey market price?
If you are a long-term investor who values brand trust and governance, Tata Capital IPO can be a solid pick. But if your focus is on short-term GMP listing gains, Tata Capital IPO GMP grey market sentiment is currently neutral.
Tata Capital’s strength lies in its disciplined risk management, Tata brand and strong retail franchise. But valuation seems a bit stretched, hence this IPO is for investors who want stable returns with patience.
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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