Tata Capital’s IPO has finally arrived, marking a significant milestone as it becomes only the second IPO from the Tata Group in the past 20 years. Whenever a Tata Group IPO hits the market, one question always stands out among retail investors — will there be a special discount for them? Historically, the Tata Group has maintained a culture of rewarding retail investors with attractive pricing. But with this IPO, the big question is whether that tradition continues even after Ratan Tata’s era or if things have changed.

This detailed analysis explores Tata Capital’s fundamentals, growth trajectory, valuation, and whether it still carries the hallmark retail-friendly sentiment that investors expect from the Tata brand.

Understanding Tata Capital’s Business Model

According to the company’s DRHP, Tata Capital is primarily engaged in lending activities — offering loans for housing, business, and personal finance, along with wealth management and private equity services. However, the major part of its business — around 97% of its total revenue — comes solely from lending.

Founded just before the 2008 global financial crisis, Tata Capital is a relatively new entrant compared to the Tata Group’s century-old companies. Yet, the company’s growth trajectory over the past few years has been extraordinary.

As of 2025, Tata Capital operates over 1,500 branches across India, up from 539 branches in 2023 — a threefold expansion in just two years. Most of these branches are concentrated in southern India. The company’s loan disbursement volume has doubled in the last two years, with year-on-year growth consistently exceeding 30%.

The employee strength has surged from 15,000 to nearly 30,000, and the customer base has grown from 3.2 million to over 7 million — more than doubling in the same period.

Financial Growth and Performance

On the financial front, Tata Capital’s numbers reflect rapid expansion. The interest income rose from around ₹10,000 crore in FY23 to ₹25,000 crore in FY25, while the net interest income has also doubled in the same timeframe.

About 75–80% of Tata Capital’s loans are secured, reducing risk exposure significantly. For any lending company, this metric is crucial because secured loans are backed by collateral, lowering the chances of bad debt.

Revenue has also shown impressive growth — from ₹13,637 crore in FY23 to ₹18,000 crore in FY24 and ₹28,000 crore in FY25. However, the net profit growth has been relatively slower, rising from ₹3,000 crore in FY23 to ₹3,650 crore in FY25. While this may concern some investors, it’s common for high-growth lending businesses, where profits tend to catch up after initial expansion phases.

Asset Quality and Risk Management

Tata Capital’s gross NPA (non-performing assets) ratio stood at 1.71% in FY24, which increased to 2.33% in FY25 and slightly further to 2.62% in the first quarter of the current financial year. Although rising, the NPA level remains below the 3% threshold, indicating manageable risk for now. However, investors should monitor this closely since an increase beyond that level could raise red flags.

Promoter Holding and IPO Details

Tata Sons, the holding company of the Tata Group, remains the main promoter of Tata Capital, along with certain Tata Trusts. Before the IPO, Tata Group held a 95% stake in the company, which will reduce to around 85% post-listing.

The IPO size is approximately ₹15,551 crore, of which ₹6,800 crore is a fresh issue — intended to strengthen Tata Capital’s lending capacity. The remaining portion is an Offer for Sale (OFS).

Comparing Tata Capital with Its Competitors

When compared to other housing finance and lending firms, Tata Capital has outperformed its peers in both growth and profitability. For instance, in the housing loan segment, Aditya Birla Housing Finance was previously the fastest-growing player, but Tata Capital has now overtaken it with a remarkable CAGR of 32.2%.

Tata Capital also leads in return on equity (ROE) and branch expansion. The company’s branch count has grown at a CAGR of 66% — far ahead of Aditya Birla Capital’s 17.9% branch growth over the past two years.

Valuation and Retail Investor Sentiment

Valuation-wise, the IPO appears fairly priced but not undervalued. The company’s pre-IPO price-to-earnings (P/E) ratio was around 35.99, and post-IPO it is expected to be 33.24. This suggests the IPO isn’t cheap, but it’s also not excessively priced.

Over the past five years, Tata Capital’s revenue has increased from about ₹10,000 crore in FY21 to ₹28,000 crore in FY25 — a CAGR of around 23%. Given this growth rate, the IPO valuation looks reasonable, though not particularly discounted.

Retail investors who were expecting the traditional Tata Group discount might be disappointed this time. The grey market premium (GMP) currently stands at only around 7%, and experts believe it could drop further as the IPO progresses.

In comparison, Tata Technologies’ IPO in 2023 offered a clear discount and strong listing gains — over 100% on debut. That success raised investor expectations, but the Tata Capital issue seems to take a more conservative pricing approach.

What Does This Say About the Tata Group’s IPO Culture?

The absence of a notable retail discount in the Tata Capital IPO raises the question — has the Tata Group’s tradition of offering investor-friendly pricing ended after Ratan Tata’s retirement? While it’s too early to draw conclusions, this issue seems to mark a shift towards more market-aligned pricing rather than sentimental discounting.

Should Investors Subscribe?

From a long-term perspective, Tata Capital is fundamentally strong, financially stable, and growing rapidly in the lending space — one of India’s fastest-expanding sectors. However, short-term investors looking for big listing gains might find the IPO less appealing.

Long-term investors may consider entering the stock later, especially if market corrections provide better valuation opportunities.

Conclusion

Tata Capital’s IPO represents a powerful growth story backed by the trusted Tata brand. The company has expanded aggressively in terms of branches, customers, and revenue. However, its valuation seems fair rather than attractively discounted, and NPAs are rising modestly.

While the IPO may not offer extraordinary listing gains, it could be a solid long-term bet for investors who believe in India’s growing lending and financial services market.