1. Introduction–
Tata Capital, the financial services arm of the Tata Group, is set to launch one of India’s largest financial sector IPOs in 2025. Backed by strong fundamentals and a solid balance sheet, the issue has attracted significant investor attention.
In this review, we analyze Tata Capital’s business model, GMP trend, financials, and explore the reason behind the price band being 55% lower than its 52-week high.
2. Business Model
Tata Capital is a diversified Non-Banking Financial Company (NBFC) offering more than 25 lending products.
It caters to:
- Retail customers (personal, home, vehicle loans)
- SMEs / MSMEs (business and working capital finance)
- Corporate clients (project and structured finance)
This diversified lending mix helps Tata Capital reduce risk and sustain profitability across market cycles.
3. Grey Market Premium (GMP): What It’s Saying Now
The Grey Market Premium (GMP) indicates how much a share might list above or below its upper price band.
As of October 4, 2025, Tata Capital’s GMP stands around ₹15 per share, suggesting a potential 4.6% listing gain based on the upper band of ₹326.
This reflects positive investor sentiment ahead of the listing.
4. Use of IPO Proceeds
Tata Capital’s IPO comprises two parts:
- Fresh Issue: ₹6,846 crore
- Offer for Sale (OFS): ₹8,665.87 crore
Utilization of funds:
- Fresh Issue: To strengthen the company’s capital base and support future lending growth.
- OFS: Provides partial exit to existing shareholders like Tata Sons and IFC.
5. IPO Details
| Particular | Details |
|---|---|
| IPO Open Date | October 6, 2025 |
| IPO Close Date | October 8, 2025 |
| Price Band | ₹310 – ₹326 per share |
| Face Value | ₹10 per share |
| Issue Size | ₹15,511.87 crore |
| Fresh Issue | ₹6,846 crore |
| Offer for Sale | ₹8,665.87 crore |
6. Why the Price Band is 55% Below the 52-Week High
- Investor Attractiveness: Discounted pricing creates a “value entry” point for retail and institutional investors.
- SEBI & Regulatory Norms: IPO price must be justified and fairly valued.
- Temporary Spikes: The 52-week high may reflect short-term rallies or one-off gains.
- Listing Gains: A conservative price band ensures strong post-listing performance and healthy demand.
7. Financial Performance (₹ in Crore)
| Particular | FY25 | FY24 |
|---|---|---|
| Revenue from Operations | 28,312.74 | 18,174.84 |
| Expenses | 23,448.73 | 13,794.78 |
| Profit After Tax (PAT) | 3,655.02 | 3,226.96 |
| Operating Profit Margin (OPM) | 17.37% | 24.15% |
| Total Assets | 2,48,465.01 | 1,76,693.98 |
📊 Revenue grew 55% YoY, but margins contracted slightly due to higher borrowing costs and operating expenses.
8. Strengths
- Strong Brand & Trust: Backed by the Tata Group’s reputation.
- Financial Stability: Consistent profitability and growing loan book.
- Scale & diversify– Tata Capital operate across 25+ lending products & Serve retails, Small and Medium Enterprises (SME), and Corporate segment.
- Diversified Portfolio: Presence across 25+ loan categories.
- Fresh Capital Boost: Will support lending expansion and risk buffer.
9. Risks
- High Competition: NBFCs like Bajaj Finance and HDFC exert pricing pressure.
- Brand Dependency: Heavy reliance on the Tata brand for customer trust.
- Unsecured Loan Exposure: Around 20–25% of the portfolio is unsecured.
- Dependence on capital markets-As the company grows, it will need access to capital markets for funding—if debt costs rise, margins may compress.
- Economic Sensitivity: A slowdown can raise NPAs.
- Regulatory Changes: RBI or NBFC policy shifts can impact growth and compliance costs.
10. Reference
- Tata capital’s Annual Report 2025
- Company’s Red Herring Prospectus (RHP) and publicly available information
11. Allotment Status for Tata Capital
To check your allotment status- click here
Disclaimer:
I am not a SEBI-registered financial advisor. The information provided in this article is for educational and informational purposes only and should not be considered as investment advice or a recommendation to buy, sell, or hold any securities. Investors should conduct their own research or consult a certified financial advisor before making any investment decisions. Market investments are subject to risks.