Tata Capital MD & CEO Rajiv Sabharwal has expressed strong confidence in India's growth potential, coinciding with the announcement of the company's upcoming Initial Public Offering (IPO). The IPO is set to open on October 6, 2025, with the aim of raising ₹15,500 crore.
Sabharwal highlighted that Tata Capital is dedicated to facilitating and capitalizing on India's significant growth opportunities. He noted that the IPO includes both a fresh issue of shares to support the organization's growth over the next 2.5 years and an offer for sale from Tata Sons and IFC Washington.
IPO Details and Objectives
The IPO is priced in the range of ₹310-326 per share. This valuation is strategically set about 5% lower than previous rights issues to encourage greater participation from retail investors. The offering comprises a total of 45.58 crore equity shares, including a fresh issue of up to 21 crore shares and an offer for sale of up to 26.58 crore shares by existing shareholders. Investors are required to bid for a minimum of 46 shares.
Tata Capital plans to utilize the capital raised through the IPO to reinforce its tier-1 capital and support future expansion. The company aims to leverage its strong presence in the retail and SME sectors, which currently constitute approximately 88% of its total book. The company's loan book is granular, with over 98% of loans being ₹1 crore or less. Secured loans make up a significant portion of the book, while unsecured loans account for only about 12%.
Growth Strategy and Financial Performance
Tata Capital has been experiencing robust growth, with a pace of about 28% over the last 2 years. The company has also maintained a low credit cost. Sabharwal stated that NBFCs, with their adaptability in technology and branch expansion, are growing faster than overall credit growth. Tata Capital's loan book has been driven by housing (one-third of growth), consumer lending, and SMEs.
The company has identified green financing and digital innovation as key pillars for future growth. Tata Capital's cleantech and infrastructure finance book reached ₹18,000 crore in FY25, demonstrating a compound annual growth rate (CAGR) of 31.8% over the past two years. The cleantech portfolio has financed over 500 renewable projects, sanctioning more than 22,400 MW of capacity across solar, wind, biomass, and small hydro projects.
Strategic Positioning and Future Outlook
Tata Capital aims to become a financial leader by leveraging the Tata brand, focusing on customer-centricity, and ensuring stability across economic cycles. The company emphasizes its granular loan book, low unsecured exposure, and multi-product strategy to balance growth and risk.
The company has deployed GenAI in underwriting for working capital loans, which has significantly reduced turnaround time for credit appraisal memos. Capital adequacy is expected to be at 22% post-IPO.
Rajiv Sabharwal is optimistic about the coming quarters, particularly after recent GST rate cuts, with positive signs emerging in vehicle sales, consumer products, and housing. He anticipates a strong Q3 due to the festive season, followed by a traditionally strong Q4. The company is focusing on affordable housing, consumer loans, leasing, and unsecured lending, where margins are higher.
Tata Capital's IPO is poised to be the largest by any NBFC, reflecting the company's scale and growth potential. The offering opens on October 6 and closes on October 8.
