Tata Capital, the financial services entity of the Tata Group, is preparing for an Initial Public Offering (IPO) of about $2 billion (more than ₹17,000 crore). The company is targeting a valuation of about $11 billion to join the ranks of the largest IPOs of the Indian financial services market in recent times. But the highly awaited listing is subject to the ultimate approval of the National Company Law Tribunal (NCLT) for the merger of Tata Motors Finance with Tata Capital, which would be finalized by the end of FY25.
This IPO is Tata Group's second big public listing in recent years, after Tata Technologies' successful listing in November 2023. Let's explore Tata Capital's history, financials, IPO facts, and what it implies for investors.
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About Tata Capital: A Leading Financial Services Powerhouse
Founded in 2007, Tata Capital has evolved as one of India's most diversified non-banking financial corporations (NBFCs), dealing with a wide range of financial products. It deals in consumer finance, business loans, wealth management, housing finance, and distribution of Tata Cards.
Key Subsidiaries:
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Tata Capital Housing Finance Limited: Deals in home loans and finance for properties.
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Tata Securities Limited: Engages in the stock markets, trading in cash and derivative segments.
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Tata Motors Finance: Offers automobile loans and vehicle financing solutions (to be merged with Tata Capital prior to the IPO).
Tata Capital's IPO follows on the heels of Tata Technologies, which got oversubscribed 69 times during its November 2023 listing. The listing will also be observed along with HDB Financial Services (HDFC Bank's NBFC arm), which had filed its IPO documents in October 2024 and plans to raise ₹12,500 crore.
For investors, this IPO provides an opportunity to invest in one of India's most trustworthy financial institutions with a high growth history and diversified portfolio.
Financial Performance: Strong Growth Trajectory
Tata Capital has exhibited stellar financial growth in recent years, making it a compelling investment opportunity.
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Loan Book Growth: ₹1,57,761 crore in FY24, up 35% from ₹1,16,789 crore in FY23.
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Net Interest Income (NII): ₹8,069 crore in FY24, marking a 31% increase from ₹6,157 crore in FY23.
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Profit After Tax (PAT): ₹3,150 crore in FY24, up 37% from ₹2,300 crore in FY23.
This growth reflects Tata Capital’s strong market position, diverse loan portfolio, and robust risk management practices.
Tata Capital IPO Details
Tata Capital's IPO consists of a fresh issue of 2.3 crore equity shares and an Offer for Sale by existing shareholders. The company is in the process of crucial strategic advancements prior to the IPO to bolster its financial situation as well as adherence to regulation. One of the key milestones is the merger with Tata Motors Finance, which has already been cleared by Tata Capital, Tata Motors Finance, and Tata Motors boards. The proposal was cleared by the Competition Commission of India (CCI) in September 2024, and upon finalization, Tata Motors will own a 4.7% stake in Tata Capital.
Tata Capital is also planning to conduct a rights issue prior to the IPO to further strengthen its finances. The IPO process is being managed by Kotak Mahindra Capital as the investment bank and Cyril Amarchand Mangaldas as the legal advisor. The listing is also in line with RBI’s directive requiring Upper Layer NBFCs to go public within three years of classification. With these strategic initiatives in hand, Tata Capital is well-placed to drive increased market visibility, improve its balance sheet, and generate strong shareholder value through this IPO.
Conclusion: Why Tata Capital IPO Matters
Tata Capital IPO is poised to be a game-changing moment for India's financial industry. The huge fund-raising, strategic consolidation with Tata Motors Finance, and RBI listing norms compliance make this a high-risk public issue.
With Tata Capital moving towards its IPO, investors and industry analysts will be watching closely the NCLT's ultimate sanction and filing of the draft prospectus by SEBI. If all goes well, this IPO will boost Tata Capital's market reputation and give investors an opportunity to share in the firm's growth story.
With solid finances, a strong strategic vision, and the Tata Group's support, Tata Capital is poised for a good listing on the stock market. Stay tuned for more information as the IPO progresses!
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