🚨 Tata Capital Gears Up for $2 Billion IPO with Rights Issue and NCD Plans
Tata Capital Limited, one of India's largest non-banking financial companies (NBFCs), is entering a crucial phase in its growth journey. The company is preparing for a massive $2 billion Initial Public Offering (IPO) expected before September 2025, in line with RBI's regulatory listing requirements for upper-layer NBFCs. In a strategic move ahead of the IPO, Tata Capital plans to raise funds through a fresh rights issue and issuance of Non-Convertible Debentures (NCDs).
🔍 What’s Happening at Tata Capital?
Tata Capital’s board will convene on Thursday to consider two key proposals:
- A rights issue to raise fresh equity capital
- Issuance of NCDs via private placement in one or more tranches
While the size and pricing details of the rights issue are yet to be revealed, the move is seen as a precursor to the company’s much-anticipated IPO. The timing is strategic as Tata Capital must meet the Reserve Bank of India’s mandate that all upper-layer NBFCs be listed by September 2025.
📅 Why the IPO Matters: RBI’s Deadline for NBFCs
In October 2022, the RBI introduced a regulatory framework for NBFCs based on their size and systemic importance. Under this, companies identified as "upper-layer NBFCs" are required to list within three years. Tata Capital, falling in this category, must go public before the deadline.
To fulfill this, Tata Capital had confidentially filed draft IPO papers with SEBI in April 2025. The public offering is expected to include:
- A fresh issue of 23 crore equity shares
- An Offer for Sale (OFS) by existing shareholders
According to reports by NDTV Profit, SEBI is likely to clear the proposal, and Tata Capital may soon file the updated public draft red herring prospectus (DRHP).
💰 Previous Fundraising: March 2025 Rights Issue
This isn’t Tata Capital’s first time raising funds through a rights issue. In March 2025, the company raised ₹1,504 crore. Key highlights of that round include:
- Tata Sons, which owns a 93% stake in Tata Capital, contributed ₹1,400 crore
- The remaining amount was contributed by Tata Investment Corporation, TCL Employee Welfare Trust, and minority investors
This infusion boosted the company's net worth and prepared the ground for expansion and compliance with regulatory norms. According to ICRA, the rights issue helped increase Tata Capital’s consolidated net worth to ₹32,563 crore by March 31, 2025.
📈 Financial Performance of Tata Capital (FY25)
Tata Capital has shown strong financial performance in the latest fiscal year. The company's profitability and asset base have both seen robust growth.
| Metric | FY24 | FY25 |
|---|---|---|
| Profit After Tax (PAT) | ₹3,327 crore | ₹3,655 crore |
| Total Asset Base | ₹1,76,694 crore | ₹2,48,465 crore |
| Gearing Ratio | 6.0x | 6.5x |
| Solvency (Net Stage 3 Loans to Net Worth) | ~5% | 5.4% |
Despite the rise in gearing, the solvency ratio remains within comfortable limits, thanks to prudent financial management and strong underwriting practices.
🏢 About Tata Capital Limited
Incorporated in 2007, Tata Capital Limited is a diversified financial services company and a subsidiary of Tata Sons Private Limited. It operates as a Non-Banking Financial Company (NBFC), offering a broad range of services across consumer, commercial, and institutional segments.
Core Offerings of Tata Capital:
- Consumer Loans: Personal, home, auto, education, and loans against property
- Commercial Finance: Working capital, equipment finance, lease rental discounting
- Wealth Management: Portfolio management, financial product distribution
- Investment Banking: M&A, equity capital markets, structured finance
- Private Equity: Growth capital investments
- Cleantech Finance: Renewable energy and waste management financing
The company has over 723 branches across India and is headquartered in Mumbai, Maharashtra.
🔄 The Merger with Tata Motors Finance
Tata Capital recently completed its merger with Tata Motors Finance Limited (TMFL). The merger received clearance from the National Company Law Tribunal (NCLT), as well as board and shareholder approval. This consolidation aims to streamline Tata Group's financial services and position Tata Capital as a stronger, unified player in the market.
📉 Rising Gearing, But Stable Solvency
According to credit rating agency ICRA, while Tata Capital’s loan book growth has been impressive, it led to a rise in the gearing ratio from 6.0x to 6.5x during FY25. However, the company’s net Stage 3 loans to net worth stood at a stable 5.4%, indicating that asset quality remains under control even with rising leverage.
📌 Conclusion: Tata Capital on the Brink of Transformation
With a history of consistent performance, strong backing from Tata Sons, and a diversified service portfolio, Tata Capital is well-positioned to become a major listed NBFC on Indian stock exchanges. The upcoming IPO, supported by a new rights issue and NCDs, marks a significant step toward meeting regulatory requirements and unlocking value for stakeholders.
As investors await the final SEBI nod and public IPO filing, Tata Capital's strategic fundraising efforts reflect its ambition to grow bigger, stronger, and more transparent in the financial ecosystem.
📢 Disclaimer
This blog is for educational and informational purposes only. The securities and financial instruments mentioned are for illustrative purposes only and not recommendations. Investors must conduct their own research and due diligence before making any investment decisions. Investments are subject to market risks.
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