Tata Capital, a subsidiary of Tata Sons, is India’s third-largest diversified NBFC, with total gross loans of Rs 2.33 lakh crore as of June 2025.
Its balance sheet spans retail, SME, and corporate lending, with 88% of its book in retail and MSME segments, one-third of which comprises home loans and loans against property (LAP).
The company has delivered strong growth – gross loans have expanded at a 37% CAGR between FY23 and FY25 – while maintaining asset quality, with a gross NPA ratio of 2.1% and a net NPA ratio of 1%.
Yet, the key question for investors remains whether Tata Capital’s IPO offers better value compared with its listed peers, Bajaj Finance and HDB Financial Services, two of India’s largest non-banking financial companies.
Bajaj Finance: The benchmark for stability
With an AUM of Rs 4.41 lakh crore, Bajaj Finance remains the gold standard in India’s NBFC space. It boasts a RoA of over 4%, RoE around 19%, and a customer base exceeding 10 crore. Its granular retail book, diversified product mix, and strong deposit franchise have made it the most stable compounder in the sector.“Bajaj Finance’s strong franchise, disciplined execution, good deposit traction, and steady performance across cycles make it the most well-rounded long-term choice for pure-play NBFC exposure,” said Abhinav Tiwari, Research Analyst at Bonanza.While the stock trades at premium valuations, analysts view it as a “core holding for steady compounding,” owing to its predictable growth and superior underwriting.
Tata Capital: The new contender for growth
Tata Capital’s IPO comes at a valuation of about Rs 1.38 lakh crore, positioning it between Bajaj Finance and HDB Financial.
The company’s net interest margin (NIM) stood at 5.2%, RoA at 1.8%, and RoE at 12.6% in FY25. Post-IPO, the fresh equity infusion will strengthen its capital adequacy and fuel expansion across retail and SME segments.
“Tata Capital offers a strong growth runway with potential IPO-led re-rating, backed by rising market share, diverse product mix, and improving profitability,” added Tiwari. However, he cautioned that integration and asset quality normalization risks remain as the book scales.
Vinit Bolinjkar, Head of Research at Ventura, believes Tata Capital could deliver faster re-rating than peers. “This is a 2–3 year re-rating story. The TMFL merger will temporarily dilute metrics but improve scale and product depth. Fresh equity post-IPO will strengthen growth capacity.”
In short, while Bajaj Finance is the safest long-term play, Tata Capital represents a tactical growth opportunity as it expands its loan book and tightens efficiency ratios.
HDB Financial: The steady accumulator
After its recent listing, HDB Financial (a subsidiary of HDFC Bank) has begun to stabilise. It reported an AUM of around Rs 1.1 lakh crore and an RoE of 14.7% in FY25. Analysts project a 20% AUM CAGR with improved return ratios – RoA of 2.7% and RoE of 17% by FY27.
However, the stock faces near-term challenges. “Rising Stage 3 formation and higher lending costs continue to be short-term concerns,” said Tiwari, adding that investors should take a cautious approach to HDB until asset quality stabilizes.
Which one should you pick?
All three NBFCs cater to different investor profiles. Bajaj Finance remains the cleanest compounder for long-term investors seeking stability. Tata Capital, with its IPO, offers a re-rating opportunity as it leverages its Tata brand, capital base, and expanding retail book. HDB Financial suits those looking for steady growth at relatively lower volatility once its asset quality stabilizes.
Shruti Jain, Chief Strategy Officer at Arihant Capital Markets, summed it up: “Bajaj Finance is the clear leader in scale and growth, but Tata Capital offers an attractive, diversified NBFC story. HDB remains strong in its niche, but Tata Capital’s entry brings a fresh contender to the big NBFC league.”
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