Posted on February 25, 2025, by Niftynews
Tata Capital, one of India’s leading non-banking financial companies (NBFC), has received approval for its Initial Public Offering (IPO) and a rights issue worth ₹1,504 crore. The record date for the rights issue is set for February 25, 2025. Tata Sons, which owns a majority stake of nearly 93%, is the largest shareholder, continuing to maintain control over the company.
Ownership Breakdown of Tata Entities in Tata Capital
Several Tata Group companies hold stakes in Tata Capital, reflecting their strategic involvement in the company’s financial journey. Here’s the breakdown of ownership:
- Tata Sons Pvt. Ltd. – 92.83%
- Tata Investment Corporation Ltd. – 2.15%
- Tata Consumer Products Ltd. – 0.02%
- Tata Chemicals Ltd. – 0.09%
- Tata Motors Ltd. – 0.12%
- Tata Power Company Ltd. – 0.06%
The largest shareholder after Tata Sons is Tata Investment Corporation, holding 2.15%. Meanwhile, smaller stakes are held by companies like Tata Chemicals, Tata Motors, and Tata Power. These entities continue to support the company’s growth and operations, contributing to its expansion in the financial sector.
Strong Financial Performance
In FY 2024, Tata Capital reported its highest-ever net profit of ₹3,150 crore, reflecting a robust 37% growth from the previous year. The company has maintained a healthy credit cost of 0.5% and Return on Equity (RoE) of 17.6%, further bolstering investor confidence.
Moreover, the company’s loan book grew by 35% year-on-year, reaching ₹1.6 lakh crore. This impressive growth showcases the company’s expanding role in providing financial services to individuals and businesses across the country.
Tata Capital IPO and Rights Issue Plans
The IPO is part of the company’s plan to comply with the Reserve Bank of India’s (RBI) guidelines for upper-layer NBFCs. In September 2022, the company was classified as such, which necessitated its listing on the stock exchanges within three years. This move has opened up an opportunity for public investment and offers a fresh avenue for growth.
The rights issue of ₹1,504 crore is expected to raise capital that will be used to further strengthen the company’s operations and expand its financial services. This issue has created a positive outlook for Tata Investment Corporation, which is closely associated with the growth of the company.
Merger with Tata Motors Finance: Strengthening Market Presence
In October 2024, Tata Capital merged with Tata Motors Finance (TMFL), a subsidiary of Tata Motors. This merger has made it India’s 12th largest non-banking financial company (NBFC). With this consolidation, the company is poised for greater market reach and stronger financial performance. The combined entity is set to serve a more diverse range of financial needs, from automotive finance to consumer loans.
This merger not only enhances the company’s service offerings but also expands its market share in the competitive NBFC sector. The strategic move allows the company to tap into a broader customer base and provide integrated financial solutions to both individuals and businesses.
Conclusion: What’s Next for Tata Capital?
The upcoming IPO is an exciting development for the company and its shareholders. With Tata Sons maintaining its dominant 93% stake, the company’s future remains secure. The financial performance, marked by strong profits and a growing loan book, positions it as a leading player in India’s financial services industry.
While the IPO is expected to attract considerable investor interest, especially from those tracking Tata Investment share price, it’s crucial to note that the company’s solid financial foundation and strategic mergers with entities like Tata Motors Finance are likely to further bolster its position in the market. Investors and stakeholders should keep an eye on the developments as the company moves forward with its expansion plans, promising a continued upward trajectory in the years to come.
