Tata Capital Limited, the flagship financial services arm of the renowned Tata Group, is making headlines with its upcoming Initial Public Offering (IPO). This milestone marks the first time the company’s equity shares will be offered to the public. As an Upper Layer NBFC under the Reserve Bank of India’s Scale-Based Regulations, Tata Capital plays a pivotal role in shaping India’s financial sector.
Who is Tata Capital Limited?
- Founded on March 8, 1991, as Primal Investments and Finance Limited, which was its original name and commencing operations on April 1, 1991, TCL has grown to become the third-largest diversified NBFC in India based on Total Gross Loans as of March 31, 2025. It’s a subsidiary of Tata Sons Private Limited, its Promoter.
- TCL operates through two main segments: Lending and Non-lending businesses. Its Lending Business offers a broad range of over 25 products, including home, SME, and corporate finance. The Non-lending activities encompass wealth management, distribution of third-party products (like insurance and credit cards), and acting as sponsor and investment manager for Private Equity funds. As of March 31, 2025, TCL has served a massive 7.0 million customers since its lending operations began in 2007
- One of the most significant milestones for Tata Capital Limited in FY2025 was the merger with Tata Motors Finance Limited (TMFL), which became effective on May 8, 2025, while April 1, 2024 was set as the appointed date for the integration. This strategic move aims to consolidate lending businesses, achieve greater scale, expand geographical reach, and strengthen its capital and asset base. This merger means that the financial figures for Fiscal Years 2025, 2024, and 2023 are not entirely comparable.
Our Promoter
- As a promoter, Tata Sons Private Limited stands behind our company, ensuring a strong foundation for future growth and success.
As on the date of this Updated Draft Red Herring Prospectus – I, our Promoter holds 3,575,064,262 Equity Shares of face value of ₹10 each, representing 88.6% of the issued. - Tata Sons Private Limited has identified Tata trusts as its promoters. These Tata trusts are public charitable trusts with no identifiable beneficiaries, other than the public at large
Shareholders of Tata Sons Private Limited
| Name | Number of shares | Percentage (%) |
|---|---|---|
| Sir Dorabji Tata Trust | 113,067 | 28.0 |
| Sir Ratan Tata Trust | 95,211 | 23.6 |
| Other Trusts | 58,005 | 14.4 |
| Tata companies | 52,013 | 12.9 |
| Unaffiliated companies | 74,244 | 18.4 |
| Individuals | 11,606 | 2.9 |
| Total | 404,146 | 100.0 |
The company’s Total Gross Loans have also seen substantial growth, reaching ₹2,265,529.6 million by March 31, 2025
The Growth Story: Year-on-Year Expansion
- Total Income: Grew by 55.9% in Fiscal 2025 compared to Fiscal 2024, and by 33.4% in Fiscal 2024 over Fiscal 2023.
- Profit After Tax: Increased by 16.3% in Fiscal 2025 and 4.0% in Fiscal 2024.
- Total Gross Loans: Demonstrated strong year-on-year growth of 40.5% in Fiscal 2025 and 34.1% in Fiscal 2024.
- This growth is driven by expanding interest income from its loan book and increased fees and commission income. The company’s diverse product portfolio, with a significant focus on Retail and SME customers (88.5% of Total Gross Loans in Fiscal 2025), and a wide branch network (1,496 branches as of March 31, 2025) underpin this performance.
Key steps for potential investors:
1. Understand the Risks: Investments in equity securities inherently carry risk, including the possibility of losing the entire investment. The sources highlight risks such as integration challenges from mergers, reliance on the “Tata” brand, credit risk, funding risk, regulatory compliance, and various litigations.
2. Offer Details: The offer comprises a Fresh Issue of up to 210,000,000 equity shares and an Offer for Sale of up to 265,824,280 equity shares by Tata Sons Private Limited (the Promoter Selling Shareholder) and International Finance Corporation (Investor Selling Shareholder). The primary objective of the Fresh Issue is to augment TCL’s Tier – I capital base to meet future capital requirements, including onward lending.
3. Listing: The Equity Shares are proposed to be listed on BSE Limited (BSE) and National Stock Exchange of India Limited (NSE).
4. Application Process: Investors will participate by submitting a Bid cum Application Form. The Price Band will be determined during the Book Building Process
MSME, Housing and Auto Financing contributed ~51% to overall NBFC credit in Fiscal 2025
- In fiscal year 2025, credit growth for Non-Banking Financial Companies (NBFCs) experienced a notable decline, moderating to 18% from the 21% growth recorded the previous year, mainly due to a decline in unsecured loans such as microfinance, personal loans, and consumer durables.
- The slowdown in unsecured loans was linked to rapid expansion in recent years and over-leveraging concerns, prompting RBI intervention in November 2023 to curb unsecured retail loan growth by tightening capital norms.
- Infrastructure still accounts for the highest share of NBFC credit at 26% in FY2025, but its contribution has declined from 31% in FY2019.
- Retail and MSME segments are projected to expand further: MSME credit reached 23% in FY2025, up from 16% in FY2019, while housing and auto finance accounted for ~16% and ~11% respectively of total NBFC credit.
- Retail loan growth is forecast to rise moderately to 17–18% in FY2026, supported by housing, vehicle, and consumer durable loans.
- NBFCs are likely to adopt a cautious stance on unsecured lending, particularly in microfinance and personal loans, due to visible stress in these categories.
Read More: Tata Capital Limited
Conclusion
Tata Capital Limited emerges from its Updated Draft Red Herring Prospectus-I (UDRHP-I) as a financially robust and strategically expanding entity within India’s dynamic NBFC sector. Its deep integration with the Tata Group, consistent growth in loans and profitability, and high credit ratings position it strongly. The recent mergers, particularly with TMFL, are poised to further enhance its market leadership and operational synergies.
However, the UDRHP-I also serves as a crucial reminder of the inherent risks in any investment. While the company outlines clear growth drivers and strong financial metrics, careful consideration of the detailed risk factors and the impact of the non-comparable financial data due to mergers is essential for any potential investor.
FAQs
Q1. What is Tata Capital Limited’s business model?
Tata Capital functions as a diversified NBFC offering retail, corporate, housing, and infrastructure finance along with advisory services.
Q2. Who is the promoter of Tata Capital Limited?
The principal promoter is Tata Sons Private Limited, the flagship holding company of the Tata Group.
Q3. What are the key risks in investing in Tata Capital Limited IPO?
Key risks include credit defaults, regulatory changes, and intense competition from banks and fintechs.
Q4. How does Tata Capital compare to peers like Bajaj Finance and HDFC?
Tata Capital has a more diversified portfolio and strong backing of Tata Sons, positioning it favorably against peers.
Q5. What will Tata Capital use the IPO proceeds for?
Funds will strengthen the balance sheet, expand lending, and enhance digital infrastructure.