MUMBAI: The leading non-banking lender Tata Capital, which is under an RBI mandate to get listed by this month, has completed investor roadshows in overseas markets for its bumper public issue that will top $2 billion or Rs 17,500 crore, seeking a valuation in the $18-20 billion range.
The Tata group company is planning the issue in the third week of September, well within the regulatory mandate.
“The company is set to launch its much-anticipated over $2 billion (depending on the exchange rate) initial public offering in the week beginning September 22,” a source in the know of the plans told TNIE Tuesday.
“The company is looking at a valuation of $18-20 billion post issue, depending on the rupee-dollar rate,” the source, who sought not to be named said, adding that "the management and i-bankers have come back today after meeting overseas investors who showed tremendous interest in the company."
The management met institutional investors in New York, London, Hong Kong and Singapore over the past few days. “The next leg is the domestic roadshows," she added.
The proposed IPO of 47.58 crore shares comprises a fresh issue of 21 crore equity shares and an offer for sale (OFS) of 26.58 crore shares, according to the updated draft red herring prospectus filed late August.
Under the OFS component, Tata Sons, which owns almost 88.6% in the company (down from 92.8% before the recent rights issue), will offload as many as 23 crore shares, while the International Finance Corporation (IFC), which is the only external shareholder in the company, will divest 3.58 crore shares from its 1.8% holding.
Tata Investment Corporation, which in turn is owned 68.51% by Tata Sons, has a 2.5% holding as of December 2024, making it the second largest shareholder.
The other shareholders include Tata Chemicals (0.09%), Tata Consumer Products (0.02%), Tata Motors (0.12%) and Tata Power (0.06%).
This IPO will be the first by a Tata group firm after the bumper listing of Tata Technologies in 2023, which was oversubscribed close to 69.4 times, raising Rs 3,042 crore. The issue got bids worth Rs 1.57 trillion from 73.58 lakh applications, breaking the record set by LIC’s issue in May 2022.
Proceeds from the issue will be used to strengthen the tier-1 capital, supporting future capital requirements, including onward lending, according to the Sebi filing.
The IPO is being done to meet the Reserve Bank’s listing mandate for upper-layer NBFCs issued in October 2023 within three years or before the end of this month. Tata Capital was designated as an upper-layer NBFC in September 2022.
The parent Tata Sons is also listed as an upper-layer NBFC but the company is in discussions with the regulator to avoid a listing having met almost all the conditions for this. But the RBI has not excluded it from the list as of June this year.
In a similar move, HDB Financial Services -- the non-banking arm of HDFC Bank -- also went public in June with a Rs 12,500-crore issue.
Bajaj Housing Finance, another upper-layer NBFC, also made a blockbuster market debut in September 2024, closing its first day of trade with a 135% premium over the issue price.
The performance of Tata Capital has been consistent with total gross loans of Rs 2.26 trillion as of March 2025, reflecting an annualized growth of 37% in each year between FY23 and FY25. Its net income stood at Rs 3,646.6 crore in FY25, up from Rs 3,029.2 crore in FY23, translating into an annualized growth of 10%. Its net interest margin stood at 5.2% in FY25.
Despite this rapid growth, asset quality held firm with gross bad loans at a low 1.9% and net bad loans at 0.8% in FY25, with a provision coverage ratio of 58.5.
The positive trend continued into Q1FY26 with the firm reporting a net profit of Rs 1,041 crore, up from Rs 472 crore in the trailing 12-month period, on an income of Rs 7,692 crore, up from Rs 6,557 crore.
Since commencing its credit business in 2007, Tata Capital has served over 7 million customers as of March 2025. In addition to lending, it also distributes third-party products such as insurance and credit cards, besides offering wealth management services, and acts as a sponsor and investment manager to private equity funds.