Tata Capital started its lending operations in 2007 and is now preparing for one of the biggest IPOs in India. Looking back, what do you see as the defining milestones in this journey?
We commenced our lending operations in 2007 and have been profitable from the very first year. Since then, we have come a long way. We crossed a loan book of Rs 50,000 crore in 2017, ten years after our inception. The next Rs 50,000 crore was added in just five years by 2022, and in the following three years, we doubled again – crossing Rs 2 lakh crore.
As of June 2025, with a loan book of over Rs 2.3 lakh crore, we are India’s third-largest diversified NBFC, having grown at a CAGR of over 28% in the past two years. With more than 25 lending products, we have built a well-diversified portfolio that allows us to manage risks across economic cycles while sustaining consistent growth. Retail and SME customers today contribute 88% of our overall book.
Our strategy has been to build a portfolio of multiple hero products rather than depend on a single offering. For instance, our housing finance arm, Tata Capital Housing Finance (TCHFL), has delivered one of the strongest growth trajectories with an ROE of over 19% in FY25. Likewise, our clean-tech business, launched in 2014, has emerged as one of the industry’s top performers with nearly zero NPAs.
Together, these strengths provide us with a strong foundation for long-term, sustainable growth.
Could you shed some light on what went behind pricing of the IPO, which has been a talking point. The shares were in heavy demand in the unlisted market, but you chose to price it at a discount even to the rights issue?
The price band was determined by Tata Capital’s Board after considering multiple inputs. During our global roadshows, we engaged with over 100 institutional investors and incorporated their feedback along with insights from our Book Running Lead Managers (BRLMs). Further, in July 2025, Tata Capital raised around Rs 1,750 crore through a rights issue at Rs 343 per share.Unlike future capital raises, which are expected to be largely institution-driven, this IPO offers a unique opportunity to broaden our retail shareholder base. To encourage wider participation, the Board set the price band at Rs 310–326 per share, with the upper end representing a 5% discount to the recent rights issue price. This approach underscores our commitment to inclusivity and to fostering enduring confidence among our investors.
Your gross loan book grew over 37% between FY23 and FY25, among the fastest in the diversified NBFC space. How sustainable is this pace, especially with RBI’s tighter capital adequacy norms? Do you see growth moderating post-IPO despite the Tier-1 capital infusion?
We acquired Tata Motors Finance (TMFL) in May 2025, with an appointed date of April 1. For accounting purposes, this required us to present FY25 financials on a combined basis, including TMFL. Excluding TMFL, our loan book grew at a CAGR of over 28% between FY23 and FY25 – among the highest in the industry.
Importantly, this strong growth was achieved while maintaining robust asset quality. As of March 2025, excluding TMFL, our GNPA stood at 1.5%, NNPA at 0.5%, and PCR at 65.8%, enabling us to sustain one of the lowest credit costs in the sector.
While I cannot provide specific guidance on our future growth trajectory, three factors give me confidence. First, we have demonstrated one of the strongest growth track records in the industry, while consistently maintaining best-in-class asset quality. Second, we have significantly expanded our distribution network over the past few years, giving us the ability to roll out all our products across branches. For instance, as of June 2025, we have over 1,500 branches, yet Home Loans are available in 251 branches and Personal Loans in 217. Finally, I remain highly optimistic about India’s potential. With the economy projected to grow above 6.5% and credit growth expected to outpace it – driven by favorable demographics and low credit penetration – we see significant opportunity. Given that 88% of our portfolio is focused on retail and SME customers, we are uniquely positioned to participate meaningfully in India’s growth story.
Proceeds are earmarked for augmenting Tier-1 capital. How do you plan to deploy this additional capital to ensure ROE remains attractive, especially when investors are watching peers like Bajaj Finance for compounding ability?
The proposed capital infusion will further strengthen our Tier 1 capital base, positioning us to accelerate loan book growth in the coming years. With a well-diversified portfolio, we will continue to expand while keeping granularity and resilience at the core of our growth strategy. Our housing finance business – accounting for nearly one-third of the overall loan book – has consistently delivered among the strongest growth rates in the industry, effectively meeting the needs of retail customers.
We believe we have built a robust franchise, anchored on rigorous risk management and best-in-class digital capabilities. This positions us uniquely to act as a catalyst of progress – channelling capital where it is most needed, fuelling aspirations, empowering businesses, and supporting households across the country.
You’ll be one of the most valuable NBFCs in India instantly at the current pricing. Do you think this sits comfortable with investors and where do you see room for further re-rating?
I joined Tata Capital in 2018, and I am truly proud of the organization that we have built together as a team. We have a very strong management bench, comprising leaders with deep experience in the financial services industry.
We are AAA rated, the highest possible credit rating an NBFC can get in India. Our international rating by S&P is aligned to the country’s sovereign rating. Coupled with the diversity and resilience of our liability franchise, this has allowed us to enjoy one of the lowest costs of funds in the industry. And of course, the Tata brand – a beacon of trust in India – remains central to our identity.
These strengths have been pivotal to our growth so far, and we remain committed to building on them as we chart the next phase of our journey.
With rapid loan growth, how are you balancing credit quality? What’s your current GNPA/NNPA profile across retail, SME, and corporate segments, and how do you see this evolving in a possibly softer credit cycle?
Risk culture is deeply ingrained in our organization. We manage credit risk through robust policies, clear delegation frameworks, independent underwriting teams, and advanced analytics—such as digital scorecards—that ensure thorough borrower and portfolio assessments. Regular stress tests and portfolio reviews keep our lending practices responsive to evolving market conditions. Alongside this, our investments in technology, cybersecurity, and fraud prevention have helped us consistently maintain one of the lowest Gross and Net Stage 3 loan ratios among large diversified NBFCs.
With this strong foundation in risk management, strengthened by our digital and analytical capabilities, I remain confident in our ability to navigate credit cycles. In fact, that philosophy has been central to the way we’ve built Tata Capital.
What’s your 5–10 year vision in terms of scale, profitability, and shareholder returns?
Looking ahead, we’re focused on continuing Tata Capital’s journey of growth and value creation. Our ambition is to strengthen our position as a leading player in the financial services sector. We see significant opportunities to expand our loan book, and our investments in technology – especially in AI and Gen AI – will help us scale efficiently, improve our cost-to-income ratio, and deliver an even better customer experience. Creating long-term value for our shareholders will continue to be central to our strategic framework.
as a Reliable and Trusted News Source(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)