Tata Capital Limited IPO

01At a glance

What the company does — lends to retail customers, small businesses and companies through more than 25 lending products, and also distributes insurance and credit cards, offers wealth-management services and manages private-equity funds (DRHP p.21). The report cited in the offer document ranks it the third-largest diversified NBFC in India by gross loans at March 2025 (DRHP p.144).

Who pays it — borrowers, through interest and fees. Retail finance was 62.3% of gross loans at March 2025, and home loans, loans against property and developer finance together 33.8% (DRHP p.28). It had 7.0 million customers and 1,496 branches at March 2025 (DRHP p.152).

Why it is raising money — to augment its Tier-I capital base to meet future capital requirements, including onward lending (DRHP p.22). The offer for sale proceeds go to Tata Sons and International Finance Corporation (DRHP p.21).

How fast it has grown — revenue from ₹136,289 million in FY23 to ₹181,748 million in FY24 and ₹283,127 million in FY25; gross loans from ₹1,201,969 million to ₹2,265,530 million (DRHP p.23, DRHP p.152).

The one thing to understand — a large, fast-growing lender whose returns have fallen as it grew and absorbed Tata Motors Finance. Return on equity went from 20.6% to 15.5% to 12.6%, return on assets from 2.9% to 1.8%, and credit cost from 0.6% to 1.4%, while provision coverage on stage 3 loans fell from 77.1% to 58.5% (DRHP p.23, DRHP p.147).

02The business, in plain words

A non-banking lender borrows from banks and the bond market and lends that money on to individuals and businesses at a higher rate, keeping the spread after its operating costs and the losses on loans that are not repaid.

A salaried customer applies for a personal loan at a branch or on the app → Tata Capital checks the customer's credit and disburses the loan → the customer repays in monthly instalments with interest → Tata Capital pays interest to its own lenders and keeps the difference.

Earnings equation: Profit ≈ loan book × net interest margin + fees − operating costs − credit losses − tax. Net interest margin was 5.2%, cost to income 42.1% and credit cost 1.4% in FY25 (DRHP p.147).

03Where the money comes from

Source: DRHP p.28, DRHP p.152.

04The growth record

Source: DRHP p.23, DRHP p.58, DRHP p.147. FY25 figures include Tata Motors Finance, merged under a scheme with an appointed date of 1 April 2024 (DRHP p.23, DRHP p.296).

05What the growth is made of

More loans and the merger. Disbursements rose from ₹747,666.6 million in FY23 to ₹1,423,016.8 million in FY25 (DRHP p.152). Tata Motors Finance was merged by a scheme effective 8 May 2025, for which 183,867,495 shares were allotted to TMF Holdings (DRHP p.23). Net interest margin held between 5.0% and 5.2% while the average cost of borrowings rose from 6.6% to 7.8% (DRHP p.58, DRHP p.147).

06Earnings quality

For a lender, operating cash flow mainly reflects loan growth. It was negative ₹231,896.0 million, ₹379,985.4 million and ₹298,724.8 million in FY23 to FY25, as loans rose by ₹356,854.9 million in FY25 alone, and was funded by borrowings (DRHP p.606, DRHP p.607). Credit cost rose from 0.4% in FY24 to 1.4% in FY25, net stage 3 loans from 0.4% to 0.8%, and provision coverage fell from 74.1% to 58.5% (DRHP p.147). The document gives a lower FY25 recovery rate on stage 3 loans for the company including Tata Motors Finance, 17.1%, than excluding it, 19.8% (DRHP p.51).

07The balance sheet

Source: DRHP p.23, DRHP p.147. Capital adequacy was 16.9% at March 2025, of which Tier I 12.8% (DRHP p.25). A rights issue raised about ₹17,518.5 million from existing shareholders in July 2025 (DRHP p.147).

08What the money is for

Source: DRHP p.22. The fresh issue is 210,000,000 shares; its value depends on the price, not yet set (DRHP p.21).

09Who is selling

Source: DRHP p.21, DRHP p.22. The weighted average cost of shares acquired in the last year was ₹284.9, within a range of ₹270.3 to ₹343.0 (DRHP p.42).

10Promoters

The promoter is Tata Sons Private Limited, which holds 88.6%; the promoter group, including TMF Holdings and Tata Investment Corporation, holds a further 7.0% (DRHP p.22). Tax proceedings against the promoter number 50, involving ₹67,600.3 million (DRHP p.27).

11Who already owns it

Source: DRHP p.22. The last two rows are our arithmetic.

12What changed just before the IPO

• Merger — Tata Motors Finance merged, effective 8 May 2025 (DRHP p.23).
• Rights issue — about ₹17,518.5 million raised from existing shareholders in July 2025 (DRHP p.147).
• Credit cost — up from 0.4% to 1.4% in FY25 (DRHP p.147).

13Capacity and expansion

A lender's capacity is capital. The fresh issue adds to Tier-I capital, which stood at 12.8% of risk-weighted assets at March 2025 (DRHP p.22, DRHP p.25). The branch network grew from 539 to 1,496 in two years (DRHP p.152).

14Market size and industry structure

The Crisil Intelligence report cited in the offer document ranks Tata Capital the third-largest diversified NBFC by gross loans and says it had the second-largest outstanding debt securities, ₹80,142 crore, among large diversified NBFCs at March 2025 (DRHP p.144, DRHP p.296). Those rankings are Crisil's, and newboard has not tested them.

15Competitive position

What the document claims, and what it rests on:

• The Tata name and parent — a subsidiary of Tata Sons (DRHP p.21).
• Breadth — more than 25 lending products plus distribution and wealth businesses (DRHP p.21).
• Borrowing access — a large bond-market presence (DRHP p.296).

Against that: falling returns, rising credit cost after the vehicle-finance merger, leverage above six times equity, and rising funding costs (DRHP p.58, DRHP p.147).

16Peers the company named

Source: DRHP p.151. The table also lists Sundaram Finance and HDB Financial Services; the peers' P/E ranges from 12.1 to 32.6, average 24.3, and P/B from 2.0 to 5.6, average 3.7 (DRHP p.146, DRHP p.151).

No P/E is possible for the company until a price band is set.

17Risks, in plain words

• Returns. Return on equity down from 20.6% to 12.6% in two years (DRHP p.23).
• Credit. Credit cost up to 1.4% and provision coverage down to 58.5% (DRHP p.147).
• Funding. Average cost of borrowings up from 6.6% to 7.8% (DRHP p.58).
• Leverage. Borrowings 6.6 times equity (DRHP p.147).
• Merger. Including Tata Motors Finance lowers the recovery rate on stage 3 loans (DRHP p.51).

18Litigation and regulatory matters

Source: DRHP p.27. The criminal cases against the company include cases against the managing director and two chief operating officers (DRHP p.27). The pages read do not break down the cases filed by the company.

19Related-party transactions

Not read in detail for this study.

20What the offer document does not say

In the sections read for this study, the document does not give:

• How much of FY25's rise in credit cost came from Tata Motors Finance, in the pages read.
• How much capital the fresh issue will raise, which depends on the price.
• What the 277 criminal cases against the company concern, in the pages read.
• What the ₹67,600.3 million of tax proceedings against Tata Sons concern, in the pages read.
• The price band, lot size or issue dates, which is normal at this stage.

21Five questions for management

1. How much of the FY25 credit cost relates to the merged vehicle-finance book?
2. Why did provision coverage fall from 74.1% to 58.5%?
3. How will return on equity recover with leverage above six times?
4. What are the 277 criminal cases against the company and its officers?
5. How long will the new Tier-I capital support growth at the FY25 pace?

1Sources and cited facts

This study was read from 1 document the company filed. The 30 figures it cites are listed under the document each came from, with the page and the sentence as printed.