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Tata Capital IPO Day 2 LIVE: Tata Capital's ₹15,512 crore IPO entered the second day of bidding today, October 7, after garnering 39% bids yesterday - its first day of opening.

The public offer by the Tata group company is open for subscription until October 8. Tata Capital IPO price band is set at ₹310– ₹326 per share.

The issue includes a fresh issue of 21 crore equity shares and an OFS of 26.58 crore shares. Under the OFS, Tata Sons will sell 23 crore shares, and the International Finance Corporation (IFC) will offload 3.58 crore shares. Currently, Tata Sons owns 88.6% of Tata Capital, while IFC holds a 1.8% stake.

Proceeds from the fresh issue will be used to strengthen the company’s Tier-1 capital base, supporting future growth and lending activities.

The IPO is also in line with the Reserve Bank of India’s mandate requiring “upper-layer” NBFCs to be listed within three years of classification.

After witnessing a downward trend, Tata Capital IPO GMP steadied at ₹12.5 today. At the prevailing GMP and upper end of the price band, Tata Capital IPO listing price could be ₹338.5, a premium of 4% over the issue price.

The company is expected to list on the stock exchanges on October 13.

Retail Finance: ₹1,430.95 Bn (61.3% of loans), CAGR 39% (Mar 2023–Jun 2025). GNPA 3.0%, NNPA 1.5%, PCR 52.1%.

SME Finance: ₹612.27 Bn (26.2%), CAGR 21.9%. GNPA 0.7%, NNPA 0.2%, PCR 68.6%.

Corporate Finance: ₹290.76 Bn (12.5%), CAGR 44%. GNPA 0.2%, NNPA 0.1%, PCR 71.2%.

Products Offered: Home loans, LAP, personal & business loans, auto finance (2W, car, CV, CE), loans against securities, microfinance, education loans, supply chain & equipment finance, leasing, infrastructure finance.

The company has a well-diversified liability base supported by a credit rating of AAA from CRISIL, ICRA, CARE and India Ratings. As per the CRISIL report, this is the highest possible credit rating that can be assigned to any NBFC in India

The IPO is a mix of OFS ( ₹8,666 crore) and fresh issue ( ₹6,846 crore). Trust is a key factor in financial services, and TCL benefits from the strong Tata brand. TCL is one of the most diversified NBFCs with a strong geographical presence. It enjoys a strong domestic rating (AAA) and the best possible international rating (BBB, capped by sovereign rating), ensuring the lowest cost of funds in the industry.

Liabilities are well-diversified across banks, NCDs, CPs, financial institutions (NHB, SIDBI), and overseas sources (ECBs, bonds). At the upper price band, the issue is valued at 4.5x P/B (pre-issue), and post-issue it is at 4.1x on FY25 BVPS.

We recommend “SUBSCRIBE for Long Term” to the issue.

The net proceeds are proposed to be utilised towards augmentation of the company’s Tier-I capital base to meet its future capital requirements, including onward lending, which are expected to ariseout of the growth in the company’s business, and to ensure compliance with regulatory requirements on capital adequacy prescribed by the RBI from time to time.

Tata Capital’s muted GMP reflects investor caution despite fair valuations. The merger with Tata MotorFinance Ltd. has led to asset quality deterioration (gross NPA 7.1%, net NPA 4.4% for TMFL), raising consolidated NPAs to ~1% from 0.5% and reducing ROE to 12.6% in FY25 from 14.2% in FY24. These concerns around profitability and integration challenges have weighed on investor sentiment ahead of the IPO.

– Views by Abhinav Tiwari, Research Analyst at Bonanza

1. Gross Stage 3 Loans stood at 2.1% as of June 30, 2025; any rise in delinquencies or defaults could impact profitability and capital adequacy.

2. Unsecured loans form ~20% of the loan book, posing higher credit risk due to lack of collateral.

3. Retail Finance accounts for ~61% of total loans; adverse trends in this segment could affect growth and asset quality.

4. Any asset-liability mismatch or funding constraints could lead to liquidity stress and impact operations.

Tata Capital IPO was booked 50% as of the second day of the bidding process today. The issue garnered bids for 16,56,52,440 shares as against 33,34,36,996 shares on offer. Here's how different quotas were booked:

QIB: 0.52x

NII: 0.43x

Retail: 0.50x

Employee: 1.52x

We believe the Tata Capital IPO offers a compelling opportunity to invest in a market-leading, highly diversified financial services platform, directly leveraging the unmatched trust and stability of the Tata Group parentage. The company has successfully established itself as a "phygital" powerhouse, catering to the massive and rapidly growing needs of India’s retail, SME, and corporate sectors.

Tata Capital Ltd. boasts an impressive financial track record, with total income surging by 56% and Profit After Tax (PAT) reaching ₹3,655 Cr. in FY25. This superior performance is underpinned by a well-diversified loan book and strong asset quality metrics. The business is fundamentally supported by its high credit rating, which ensures a low cost of funds, and its integrated model, which includes the strategic merger with Tata Motors Finance to enhance its scale.

The IPO is driven by both strategic growth plans and the regulatory mandate for Upper Layer NBFCs to list. Proceeds from the fresh issue will strategically strengthen the company's Tier-1 capital base, providing necessary fuel for onward lending and aggressive expansion in high-growth areas like retail and green finance.

At an anticipated valuation that reflects its quality and brand premium, we recommend that investors seeking exposure to a stable, blue-chip player in India’s crucial financial services sector consider SUBSCRIBING for a long-term perspective.

Tata Capital's loan portfolio is well-diversified and granular, with ticket sizes ranging from Rs. 10,000 to over Rs. 1 billion. As of June 30, 2025, over 98% of loan accounts were below Rs. 10 million, 80% of total gross loans were secured, and the organic book contributed more than 99% of the portfolio.

Tata Capital operates in both lending and non-lending segments. The lending business, which accounts for ~97% of total income, includes loans to retail, SME, and corporate customers. The non-lending segment (~3% of income) covers distribution of third-party products (insurance, credit cards), wealth management services, and sponsorship/management of PE funds.

As of June 30, 2025, it operated 1,516 branches across 27 States and Union Territories, staffed with in-house teams for acquisition, processing, documentation, and servicing. The branch network expanded at a CAGR of 58.3% from March 31, 2023 to June 30, 2025, driven by consistent additions over the past three years.

At the upper price band, the issue is valued at an adj. P/BV of 3.6x (post-issue BVPS), broadly in line with peers, making it fully priced. The company has reported steady growth in interest income on the back of loan book expansion and a widening branch network across India.

However, its RoE and RoA remain lower than peers, which is a concern. Backed by a strong brand and the proposed merger with TMFL that will enhance its customer base, the company is well-positioned for long-term growth.

However, considering the near-term operational challenges, we assign a “Subscribe for Long Term” rating to the issue.

The initial public offer of non-banking financial company Tata Capital Ltd entered its second day of subscription after receiving 39 per cent bids on the first day of bidding on Monday.

The IPO got bids for 12,86,08,916 shares against 33,34,36,996 shares on offer, according to details available with the NSE.

The quota for Qualified Institutional Buyers (QIBs) got subscribed 52 per cent, while the category for Retail Individual Investors (RIIs) received 35 per cent subscription. The portion meant for non-institutional investors attracted 29 per cent subscription.

Tata Capital Limited, the flagship financial services arm of the Tata Group with a legacy spanning over 150 years, is the third-largest diversified NBFC in India. It offers one of the widest lending product portfolios and operates through an omni-channel distribution network that includes a pan-India branch presence, strategic partnerships, and robust digital platforms.

At the same time, its deep integration of digital capabilities and analytics lies at the heart of its operations, ensuring superior customer experience and driving sustainable business performance. Tata Capital seeks to reduce its credit cost ratio below 1% by strengthening risk management and credit underwriting, supported by digital tools and analytics.

By maintaining a diversified loan portfolio across products, customers, and geographies, and increasing the share of secured lending, the company minimizes concentration risks.

At the upper price band, the company is valued at a P/E of 32.3x, P/B of 3.5x based on its FY25 earnings, and a market cap of ₹13,83,827 million post issue of equity shares.

We believe that the IPO is fully priced and recommend a “Subscribe – Long Term” rating to the IPO.

After witnessing downward trend, Tata Capital IPO GMP steadied at ₹12.5 today. At the prevailing GMP and upper end of the price band, Tata Capital IPO listing price could be ₹338.5, a premium of 4% over the issue price.

The company is expected to list on the stock exchanges on October 13.

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