3 factors taking the charm away from Tata Capital IPO. Is it still a buy on last day? – News Air Insight

After strong hype and bullish commentary from analysts, sentiment around the Tata Capital IPO has begun to cool. The grey market premium (GMP) stands at around 4%, far below the excitement typically associated with a Tata Group listing. The IPO was subscribed just over 60% after two days of bidding. Three factors are dampening the appeal of India’s most anticipated listing this year.

1) LG IPO

The entry of LG Electronics India’s Rs 11,600 crore IPO, opening the same week, has diverted considerable investor attention from Tata Capital. Analysts, including Prashanth Tapse of Mehta Equities, note that with limited capital chasing multiple large issues, investors are being selective.

LG’s IPO, priced reasonably and offering direct exposure to India’s consumer growth story, appears to have shifted near-term sentiment. For many retail and institutional investors, it presents a straightforward trade-off.

2) Falling GMP

The muted grey market response has been another dampener. Shruti Jain, Chief Strategy Officer at Arihant Capital, believes the market has already priced in Tata Capital’s positives.

“The muted GMP reflects that much of the optimism is already factored in. At 4.2–4.3x post-money, valuations don’t leave much room for listing gains,” she said, adding that several growth stocks are undergoing valuation realignments amid changing market sentiment.

Also Read: Rs 11,600 crore heading to Korea? LG dangles a carrot to keep Indian IPO investors hooked

3) Margins and asset quality concerns

While Tata Capital’s financial performance remains solid, some analysts point to short-term risks. The merger with Tata MotorFinance has impacted consolidated profitability and asset quality, tempering expectations—especially for investors focused on short-term returns.

Is it still a convincing buy?

Despite near-term noise, brokerages maintain that Tata Capital is a structurally strong play on India’s credit expansion cycle. With a diversified portfolio spanning retail and SME lending, strong brand parentage, and a digital growth push, analysts say the IPO’s valuations are fair relative to peers and leave room for gains.

The company’s fundamentals. steady AUM growth, improving return ratios, and India’s expanding credit penetration, position it to benefit from rising financial inclusion. For patient investors, analysts see Tata Capital as a stable, long-term compounding story rather than a quick listing pop.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times)