Tata Capital IPO Explained: One of India’s Biggest Public Listings in 2025

If you’ve ever taken a car loan, a business loan, or bought something on EMI from a trusted brand, chances are you’ve already crossed paths with Tata Capital - the financial arm of the legendary Tata Group. Now, this trusted name is coming to the stock market with one of India’s biggest IPOs of 2025 - valued at around ₹15,512 crore - opening for public subscription on October 6 and closing on October 8.

This IPO has generated huge buzz because it’s backed by the Tata brand, and big institutional investors have already put in over ₹4,641 crore before it even opens to the public. In this blog, we’ll walk through what Tata Capital really does, where your money would go if you invest, how strong its business is, what the risks look like, and how it stacks up against others in its field.

IPO Overview

• IPO Date: October 6 to October 8, 2025
• Total Issue Size: ₹15,511.87 crore
• Price Band: ₹310 to ₹326 per share
• Minimum Investment: ₹14,996
• Lot Size: 46 Shares
• Tentative Allotment Date: October 9, 2025
• Listing Date: October 13, 2025 (Tentative)

How Tata Capital Makes Money

Tata Capital is a Non-Banking Financial Company (NBFC) - which means it provides loans just like banks do, but it doesn’t take savings deposits from customers. Instead, it raises money from banks, mutual funds, and other investors, and lends it to individuals and businesses for a slightly higher interest rate. That difference in interest is how it earns profit.

As of June 30, 2025, Tata Capital had given out total loans worth over ₹2,33,400 crore, making it India’s third-largest diversified NBFC. Most of its business comes from retail and SME loans (small-ticket loans to individuals and small businesses). About 98% of its borrowers have loans smaller than ₹1 crore, which spreads out risk.

The company offers more than 25 financial products - from car loans, business loans, and home loans to wealth management, insurance distribution, and credit cards. It has a wide reach across India, with 1,516 branches in 27 states and union territories, plus over 30,000 agents and digital partners helping it reach both big cities and rural towns.

Where the IPO Money Will Go

• To Strengthen Capital Base: Out of the ₹15,511.87 crore IPO size, Tata Capital will raise ₹6,846 crore through a fresh issue of shares. It will be used to increase the company’s Tier-I capital, which is like a safety cushion against loan losses. The RBI requires NBFCs to maintain a minimum adequacy ratio (CRAR) of 15%. Tata Capital’s current ratio is 16.6%, so this new money gives it more room to lend and grow safely.
• For Future Lending and Growth: The company plans to use the new funds to support its growing loan book - now at ₹2.33 lakh crore - so it can lend more to customers without risking stability. The idea is to expand responsibly while following the RBI’s tighter NBFC rules.
• To Meet Regulatory Mandate: This IPO isn’t just about raising money - it’s also something the RBI made mandatory. In 2022, the RBI classified Tata Capital as an “Upper Layer NBFC”, meaning it must list on the stock exchanges by 2025 for better transparency and governance. So, this IPO fulfills a regulatory requirement while also unlocking growth potential.

What Works in Tata Capital’s Favour

• Trusted Tata Brand and Market Leadership: As part of the Tata Group, India’s most respected business house, Tata Capital benefits from huge brand trust. It’s the flagship financial services arm of the group and currently ranks as the third largest NBFC in India by total loans.
• High Credit Quality and Rating: The company holds the highest possible rating - ‘AAA’ with a stable outlook - from CRISIL, ICRA, CARE, and India Ratings. This means lenders see Tata Capital as extremely safe, which helps it borrow money at lower interest rates.
• Low Risk, Well-Spread Loan Book: Around 98% of its accounts are for loans below ₹1 crore, meaning its exposure to big risky borrowers is minimal. This kind of “granular” loan book reduces concentration risk - simply put, if one customer defaults, it won’t hurt the whole business.
• Stable Asset Quality: Its Gross Stage 3 Loans Ratio (bad loans before provisions) is 2.1%, and Net Stage 3 Loans Ratio (bad loans after provisions) is 1% - among the best in the NBFC industry. It shows Tata Capital is managing its loans safely.
• Strong Digital Integration: Nearly 96% of retail loans are now processed through automated systems, speeding up approvals and reducing manual work. That improves both cost efficiency and accuracy.

Risks - Things Investors Should Watch

• High Dependence on Borrowing: Tata Capital’s total borrowings stood at ₹2,11,852 crore as of June 2025. That’s 6.5 times its equity, meaning for every ₹1 it owns, it has borrowed ₹6.5. This keeps growth fast but exposes it to funding risks if borrowing costs rise.
• Rising Credit Costs: The company’s cost of bad loans (credit cost) rose from 2.1% in June 2024 to 2.4% in June 2025. That means slightly more loans turned bad over time. If this trend continues, it could hurt profits.
• Integration Hiccups Post Merger: Tata Capital merged with Tata Motors Finance in May 2025. Analysts warn that this makes year-on-year comparisons tricky since FY25 includes the acquired business, which artificially inflates growth figures.
• Regulatory Scrutiny and Compliance Issues: Past RBI inspections of the merged entity (TMFL) found issues like weak KYC tracking and customer data duplication. If such issues reoccur, they may attract penalties or reputational damage.
• Global and Domestic Interest Rate Shocks: Since Tata Capital relies heavily on borrowing, any spike in interest rates could make it costlier to raise funds, squeezing margins.

For detailed information, visit Tata Capital’s IPO page.

Tata Capital Peer Comparison

• Scale: Tata Capital’s ₹2.33 lakh crore loan book makes it India’s third-largest NBFC, behind Bajaj Finance (₹4.4 lakh crore).
• Profitability: Return on Equity (RoE) is 12.6%, meaning Tata Capital makes ₹12.6 profit for every ₹100 shareholders have invested. Bajaj Finance makes nearly ₹19 on the same base, showing Tata Capital still has room to improve.
• Leverage: Its borrowing-to-equity ratio is higher (6.6x vs Bajaj’s 3.7x), which increases risk but also supports growth.
• Valuation: With a Price-to-Earnings (P/E) ratio of 37.9x, Tata Capital is as expensive as Bajaj Finance.

Source: RHP, internal calculation

Financial Performance

From FY23 to FY25, revenue from operations grew at a fast 44% CAGR, touching ₹28,370 crore by FY25, helped by the TMFL acquisition. Profit after tax grew from ₹2,946 crore in FY23 to ₹3,655 crore in FY25.

The June 2025 quarter showed a dramatic 114% growth in profit, reaching ₹1,041 crore. This was driven by better cost control - its cost-to-income ratio improved to 36.8% - and the benefit of large digital automation.

Net Interest Margin (NIM), which shows how much profit it makes on every rupee lent, remained stable at around 5.2%, showing consistent efficiency. However, borrowings jumped, which increased leverage risk.

Overall, Tata Capital’s growth story is impressive but partly boosted by merger effects, so investors should watch the next few quarters for pure organic performance.

Source: RHP

Tata Capital IPO Valuation

At the upper price band of ₹326, Tata Capital’s post-IPO market cap will be around ₹1.38 lakh crore. That’s a premium valuation, reflecting both confidence in the Tata brand and its strong growth metrics.

The P/E ratio of 37.8 times means investors are paying ₹37.8 for every ₹1 of profit Tata Capital made last year - priced on par with Bajaj Finance, a benchmark for high-quality NBFCs. The P/B ratio (price-to-book value) is 4.1 times, which is standard for this industry.

This pricing signals that investors are paying for both current strength and future growth potential. Still, since FY25 numbers include the Tata Motors Finance merger, comparisons should be made carefully.

Disclaimer: The P/E ratio here is calculated using the company’s post-IPO equity and its most recent FY25 net profits at the upper end of the price band.

Selling Shareholders - Who’s Cashing Out

The IPO includes an Offer for Sale (OFS) worth ₹8,665.87 crore, where existing shareholders sell part of their holdings:

• Tata Sons Private Limited, the promoter, is selling shares worth ₹7,498 crore. Since it has been the promoter since 2007, this partial sale is mainly to diversify ownership.
• International Finance Corporation (IFC) will sell its stake for ₹1,167.9 crore, earning about 13 times return on its 2024 investment - a clear sign of how much the company’s value has grown.

The company itself will not receive any money from this OFS.

The People Behind Tata Capital

Rajiv Sabharwal, the Managing Director and CEO, leads the company. He’s an IIT Delhi and IIM Lucknow graduate with decades of experience, including a senior stint at ICICI Bank and private equity firm True North. He’s known for combining banking expertise with a digital-first approach - a key factor behind Tata Capital’s automation success.

Saurabh Agrawal, Chairman and Group CFO of Tata Sons, brings strategic oversight from his vast experience across top financial institutions like Aditya Birla Group and Standard Chartered.

Rakesh Bhatia, the CFO, oversees finance and governance. Backed by experience at multiple financial firms, he has been pivotal in integrating Tata Motors Finance and managing debt efficiently.

The team also includes strong independent voices like Dr. Punita Kumar Sinha, a Wharton-educated finance expert, and Mr. Nagaraj Ijari from TCS, who add a governance and tech perspective.

Together, this leadership blends Tata values with global financial expertise — a strength that instills investor confidence.

Industry Outlook

India’s NBFC sector has grown massively - from less than ₹2 trillion in 2000 to nearly ₹48 trillion by FY25. That’s partly because NBFCs serve millions of people and small firms that banks often overlook.

Three big forces are driving this industry forward:

• Credit Demand: Loans are growing faster than India’s GDP - credit demand is expected to rise 15-17% annually till FY28.
• Financial Inclusion: With only 27% of Indians considered financially literate, the untapped market remains huge.
• Digital Shift: Technology - from mobile lending apps to cashless disbursements - is making lending faster, cheaper, and more accurate.

However, NBFCs face challenges like strict RBI regulations, credit risk (loans going bad), and dependency on funding markets. But strong brands with solid management often navigate these hurdles better.

Analyst View

Tata Capital’s IPO blends three elements - brand strength, high investor trust, and compliance with the RBI’s listing rule. The fundamentals look sound: strong credit quality, broad customer base, and top ratings. The risks? High leverage, recent merger noise, and expensive valuation.

For long-term investors who believe in the Tata Group’s disciplined growth story and India's rising credit demand, this IPO could be a solid addition. But returns may come steadily, not overnight - as this is a trusted lender, not a flashy tech startup.

In short, Tata Capital’s IPO is not just another listing. It’s the Tata Group marking its full entry into digital finance - steady, reliable, and built for the long run.

How to Apply for an IPO on INDmoney?

1. Download the INDmoney app and complete your KYC.
2. Go to INDstocks → IPO, or just search “IPO”.
3. Tap on an IPO from the list of live IPOs.
4. View key details like price band, lot size, and dates.
5. Tap Apply Now and choose the number of lots.
6. Use INDpay UPI for instant mandate tracking.
7. Your funds will be blocked until the share allotment is finalized.

For a seamless application process, visit the INDmoney IPO page.

Disclaimer

Source: Tata Capital's RHP. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Please be informed that merely opening a trading and demat account will not guarantee investment in securities in the IPO. Investors are requested to do their own independent research and due diligence before investing in an IPO. Please read the SEBI-prescribed Combined Risk Disclosure Document prior to investing. This post is for general information and awareness purposes only and is nowhere to be considered as advice, recommendation, or solicitation of an offer to buy or sell, or subscribe for securities. INDstocks is acting as a distributor for non-broking products/services such as IPO, Mutual Fund, and Mutual Fund SIP. These are not exchange-traded products. All disputes with respect to the distribution activity would not have access to the Exchange investor redressal forum or the Arbitration mechanism. INDstocks Private Limited (formerly known as INDmoney Private Limited) does not provide any portfolio management services, nor is it an investment adviser. Logos above are the property of respective trademark owners, and by displaying them, INDstocks has no right, title, or interest in them. SEBI Stock Broking Registration No: INZ000305337, Trading and Clearing Member of NSE (90267, M70042) and BSE, BSE StarMF (6779), SEBI Depository Participant Reg. No. IN-DP-690-2022, Depository Participant ID: CDSL 12095500, Research Analyst Registration No. INH000018948 BSE RA Enlistment No. 6428.