The Morning Brief Dissecting 2025’s Biggest IPO: Tata Capital
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Sep 30, 2025 Tarun Singh, Managing Director of Highbrow Securities and IPO expert, shares insights on Tata Capital's significant upcoming IPO. He discusses the strategic decision to price the IPO below prior levels to attract retail investors and the timing influenced by regulatory changes. Tarun warns about potential risks from the merger with Tata Motors Finance, highlighting challenges in loan mix and commercial vehicle exposure. He also emphasizes the importance of strong housing finance to offset stresses and the valuations being in line with industry standards.
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Regulatory Timing Shaped The IPO Move
- Timing of the IPO was partly driven by regulatory classification and RBI timelines for upper-layer NBFCs.
- Tata frames the listing as the culmination of 18 years of building a low credit-cost, resilient book.
Transmission Of Rate Cuts To NBFCs
- Rate transmission to NBFCs lags banks but has started and should accelerate in Q3–Q4, benefitting lending margins.
- Tata Capital benchmarks floating rates internally and prioritises passing on cost-of-funds declines.
Profitability And Merger Expanded Vehicle Finance
- Tata Capital reported PAT of ₹3,655 crore in FY25 and used IPO proceeds to bolster Tier-1 capital for lending growth.
- The May 2025 merger with Tata Motors Finance added 353 branches and expanded vehicle finance exposure.