Biggest IPO of the Year 2025: TATA Capital Ltd

Tata Group's Tata Capital's IPO is going to be biggest IPO of the upcoming year 2025.

Tata Capital Limited ("TCL"), the flagship financial services company of the Tata Group, is a subsidiary of Tata Sons Private Limited and is carrying on business as a non-banking financial company.

Tata Capital and its subsidiaries are engaged in providing/supplying a wide array of services/products in the financial services sector and operates across various areas of business: Commercial Finance, Consumer Loans, Wealth Services and distribution and marketing of Tata Cards.

Company General Information

Incorporated in 2007, Tata Capital Limited is a leading financial and investment service provider in India, headquartered in Mumbai. It has over 100 branches all over the nation and offers a wide range of products and services to meet the diverse financial needs of its retail, corporate, and institutional customers. Tata Capital's offerings include Personal Loans, Private Equity, Home Loans, Loan Against Property, Business Loans, Wealth Products Distribution, Other Consumer Loans, Commercial and SME Finance, Cleantech Finance, Leasing Solutions, Institutional Distribution, and Tata Cards.

Key Achievements in the Fiscal Year 2022-23:

Surpassed the ₹1 Lakh Crore book size. Recorded the highest-ever disbursals in FY23 marking a 42% year-on-year increase and crossed the ₹20,000 Crore quarterly disbursals mark for the first time.

Achieved the highest-ever profit after tax of ₹2,975 Crore reflecting an 80% year-on-year increase.

Achieved the highest-ever Return on Equity (RoE) of 23.0%, including one-time gains. Excluding one-time gains, RoE increased to 17.3% from 15.6% in FY22.

Reduced credit costs at 0.5% in FY23, representing a 47% decrease year-on-year.

Financial Performance

Revenue: 18198 Cr+
Profit After Tax: 4467 Cr+
Net Profit Margin: 24.5%

Business Model

Tata Capital Limited operates as a systematically important non- deposit taking non-banking financial company (NBFC-ND-SI) offering a diversified range of financial services to various customer segments like

Retail: Consumer loans (home loans, auto loans, personal loans, loan against property etc.) and wealth management services.

Corporate: Business Loans, Commercial and SME Finance, Cleantech finance and leasing solutions.

Institutional: Investment banking, Private Equity

It various revenue streams are - Interest Income, Fees and Charges, Commission on wealth management services, Investment banking fees and Distribution income.

Future Prospects

Tata Capital is planning to simplify its legal entity structure by merging the two of its subsidiaries, Tata Capital Financial Services Limited (TCFSL) and Tata Cleantech Capital Limited (TCCL) wherein the holding company will be Tata Capital Limited. This strategic move aims to create a unified entity with a broader and more robust capital and asset base. The necessary approvals for this merger have been filed and Tata Capital anticipates the process to be completed in FY24.

The company has introduced a new omni-channel marketing automation platform. This platform facilitates real-time customer engagement throughout the loan origination servicing process. Key features of this tool include customer journey orchestration across multiple channels, real-time nudges, detailed insights, and analytics of executed campaigns, as well as App/Web integration for enhanced engagement and retention activities. These advancements are expected to enhance marketing productivity and deliver a more personalized experience for Tata Capital's customers.

Strengths

Tata Brand Value
One of its key strengths lies in its association with the Tata Group which is a conglomerate known for its strong business ethics and philosophies. They are widely recognized, trusted and respected in the market, which provides Tata Capital with a significant advantage in terms of brand image and credibility. This association enhances customer trust and confidence in Tata Capital's products and services which contributes to its competitive position in the market
Adoption of New technology
Several machine learning-based scorecards are in use for underwriting as well as debt servicing of loans. Use of these advanced algorithms has helped them assess creditworthiness and mitigate risks, make faster and accurate lending decisions and to set up a more efficient debt servicing strategy. They also use Robotic Process Automation (RPA) for repetitive tasks in their operation shops which has now reached at a high level of maturity. RPA has now been implemented for almost all centralised processes. This has improved the overall operational efficiency and in turn leaded to cost reduction. The use of digital channels for collection of EMI payments also saw an increase over the year, backed by launch of new payment modes including QR code-based payments and UPI payments. Currently more than 90% collections take place through digital channels.
Digitalization of records
75% of the customer service interaction is through the digital platforms. Customers can conveniently interact via mobile applications, WhatsApp, chat-bots, and voice-bots. The introduction of their chat-based servicing channel (TIA) has seen a substantial increase in usage with over 8 lakh interactions per month. They have also introduced user-friendly digital kiosks at select Tata Capital branches. These kiosks offer more than 20 types of services that customers can avail seamlessly.

Risks

Competition from traditional and new age companies.
It faces intense competition from established players like Bajaj Finserv, HDFC Bank and SBI in various segments.

High Regulatory environment
The Indian financial services sector is heavily regulated and Tata Capital just like any other player is subject to various regulations that can impact its operations, profitability, and growth