Tata Capital IPO. Can This NBFC Replicate Tata Tech's Blockbuster Listing?

The banking, financial services and insurance (BFSI) space is buzzing right now, with the sector gearing up for a massive Rs 580 billion (bn) fundraising through IPOs.

Analysts believe this rush is largely driven by regulatory requirements, even though retail participation in the primary market has been relatively muted.

In 2025 so far, three BFSI firms have already raised Rs 167.7 bn, which accounts for over 21% of the total IPO proceeds.

And the momentum isn't slowing down; around 15 more companies are lined up to hit the market, making BFSI the busiest sector in the IPO pipeline that exceeds Rs 2.7 trillion (tn), according to PRIME Database.

Amid this wave of financial players heading to the bourses, one name that has captured all the limelight over the last couple of days is Tata Capital.

About Tata Capital

Tata Capital, the flagship financial services arm of the Tata Group. It operates as a non-banking financial company (NBFC) under the ownership of Tata Sons Private Limited.

As a trusted name in India's financial landscape, Tata Capital and its subsidiaries offer a broad range of financial products and services.

The company's operations span several key areas, including commercial finance, consumer loans, wealth management, and the distribution and marketing of Tata Cards. Through its subsidiaries, Tata Capital has expanded its footprint in the financial sector.

One such subsidiary, Tata Capital Housing Finance, focuses on providing home loans and affordable housing finance solutions. It also offers loans against property and extends financing to developers for residential and commercial construction projects.

Another notable arm, Tata Securities, plays an active role in India's capital markets. As a member of the Bombay Stock Exchange in both cash and derivatives segments, it also functions as a Depository Participant with Central Depository Services and National Securities Depository.

Here's all you need to know about Tata Capital's IPO.

IPO Filing

More than a month after Tata Capital got the Indian market regulator's go-ahead for making its market debut, the non-banking financial company has filed its updated draft papers for the mandatory listing in August 2025.

The book-running managers of IPO are Kotak Mahindra Capital, Citi, Axis Capital, JP Morgan, HSBC Securities, ICICI Securities, IIFL Capital, BNP Paribas, SBI Capital, and HDFC Bank.

IPO Size

The Tata Capital IPO will be a mix of a fresh issue and an offer for sale (OFS), with the total size pegged at around Rs 170 bn, making it one of the five biggest IPOs in the last decade.

In all, about 475.8 m shares will be offered, of which the fresh issue accounts for 210 m shares.

The company has yet to finalise the price band and issue price, which will be decided in consultation with its lead book managers. Alongside this, the IPO will also include a small reservation for employees, capped at 5% of the post-offer paid-up equity capital.

On the OFS side, Tata Sons is set to offload up to 230 m shares, while International Finance Corporation (IFC) will sell about 35.8 m shares.

At present, Tata Sons holds 88.6% in Tata Capital.

IFC, owning 1.8%, will be selling half of its stake. The share sale is expected to help rebalance the ownership structure and provide Tata Capital with a stronger public presence as it makes its debut on the stock exchanges.

IPO Valuation

Market estimates suggest Tata Capital will raise Rs 165 bn to Rs 175 bn, the biggest in the financial sector, through the offering.

Following extensive roadshows and discussions with stakeholders, the company's listing valuation is now being pegged at this level.

Timeline

This IPO, one of the most anticipated of the year, is expected to hit the market in the first half of October, slightly later than the regulatory deadline of September.

The delay came after the National Company Law Tribunal approved the merger of Tata Motors Finance in May.

The non-banking finance company (NBFC) approached the regulator for an extension of the deadline, which it received, based on sources, the media has reported.

According to a Moneycontrol report, the current plan is for the anchor portion to open on 3 October, with the public subscription scheduled between 6-8 October, right after the weekend.

However, these dates are not final and may shift if unexpected circumstances arise, the report added. The report also mentioned that LIC is likely to make a significant bet on this issue.

Update: While the above details were based on earlier estimates, the final IPO specifics are now out. Here are the key details of Tata Capital's IPO at a glance:

IPO Details and Structure

Here are the key details of the upcoming offer...

Issue period: 6 October 2025 to 8 October 2025

Type of issue: Book building

Price band: Rs 310 to Rs 326 per share

Face value: Re 10 per equity share

Lot size: 46 shares

Application limit: The minimum application size is one lot, priced at Rs 14,996, while investors can apply for up to 13 lots, amounting to Rs 194,948. For small non-institutional investors, the minimum investment is Rs 209,944 (14 lots); for big non-institutional investors, it is Rs 1,004,732(67 lots).

IPO allotment date: 9 October 2025

Listing date: 13 October 2025

The issue is a combination of fresh issue of 210 m shares aggregating to Rs 68,460 m and offer for sale of 265.8 m shares aggregating to Rs 86,658.7 m.

IPO Objective

Tata Capital's IPO will have two parts. The Offer for Sale will allow existing shareholders to cash out a portion of their holdings, while the fresh issue will bring in new funds to strengthen the company's tier-1 capital base.

The money raised will also help meet future business needs, including lending. On top of that, going public is expected to boost Tata Capital's brand presence and give it the added advantages of being listed on the stock exchanges.

Key Strengths

• It is the flagship financial services company of the Tata Group, with a proud legacy spanning over 150 years, known for its trust, reliability, and strong brand presence across India.
• India's third-largest diversified NBFC, offering one of the most comprehensive lending product suites in the country, with Total Gross Loans of Rs 22.7 bn, according to the CRISIL Report (31 March 2025). This extensive portfolio enables the company to serve a wide range of customer needs effectively.
• A robust omni-channel distribution model that seamlessly integrates a pan-India branch network, strategic partnerships, and advanced digital platforms. As of 31 March 2025, the company operates 1,496 branches across 1,102 locations in 27 states and union territories, ensuring deep market penetration and accessibility.
• It maintains the highest credit rating and a diversified liability profile, which translates into one of the lowest cost of funds among peers, supporting sustainable growth and competitive lending rates.

Risk Factors

• A small portion of the company's loans are classified as stage 3, and defaults or delayed payments could impact business performance, cash flows, and financial stability.
• A notable part of the loan portfolio is unsecured, and difficulties in recovering these loans on time may affect operations and overall financial health.
• Shifts in the composition of the loan portfolio may influence financial metrics and asset quality, potentially affecting business performance and results.
• While most loans are secured, the company remains exposed to potential losses in recovering the value of collateral or enforcing security.
• Significant exposure to Home Loans, Loans Against Property, and Developer Finance means any negative trends in the real estate sector could affect business operations and results.

Recent Developments

Tata Capital's merger with Tata Motors Finance (TMFL), effective from 8 May and approved by the NCLT, marks a major step in expanding its financial services presence.

The merger combines the lending businesses of both companies, creating a stronger and more unified entity.

This strategic consolidation is expected to:

• Expand Tata Capital's scale and improve operational efficiency by bringing together complementary businesses.
• Broaden its reach across India, serving a larger and more diverse customer base.
• Strengthen the company's capital and asset base to support long-term growth.
• Unlock synergies that enhance value for stakeholders.
• Offer integrated and diversified financial solutions to meet evolving customer needs.
• Provide employees with new growth opportunities while promoting knowledge sharing and expertise across teams.

Market Conditions and Tata Capital's IPO Outlook

Tata Capital's much-anticipated IPO is coming at a time when market conditions for NBFC listings have been challenging.

Several players, including SK Finance, Veritas Finance, and Avaanse Finance, have put their IPO plans on hold amid weak investor sentiment and global uncertainties.

Despite these headwinds, the financial sector has seen some strong IPO performances recently. HDB Financial Services, a subsidiary of HDFC Bank, raised Rs 125 bn in June 2025.

Although HDB's shares have been somewhat volatile since listing.

Bajaj Housing Finance also made a splash with a September 2024 debut, delivering a 135% listing day premium.

Tata Capital's IPO could emerge as the largest financial sector listing in India and the biggest overall since Hyundai Motor India's US$ 3.3 bn (Rs 278.7 bn) IPO in October 2024.

Conclusion

Tata Capital's IPO will be the second major listing from the Tata Group after Tata Technologies. Whether it will be a blockbuster remains to be seen.

Tata Technologies had an impressive debut with a 140% premium, but its stock has since declined over 25% from its listing price and is down more than 22% year-to-date on the NSE.

As India Ratings expects NBFC Assets Under Management (AUM) growth to moderate to around 18.5% in FY26, after a strong 25% expansion in FY25, as bank funding to the sector eases despite RBI's normalisation of risk weights.

This backdrop, combined with Tata Capital's strong business fundamentals and strategic merger with Tata Motors Finance, is likely to bolster the performance of its IPO.

While it remains to be seen if Tata Capital's IPO will match the success of Tata Technologies' debut, if successful, it could set a new benchmark for future listings within the Tata Group.

Prospective investors should still review the company's financials and governance practices to ensure alignment with their investment goals and risk profile.

However, investors should conduct due diligence on the company's financials and governance framework to assess its alignment with their investment strategy and risk appetite.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...