The Tata Group company released its results in the post-market hours on Thursday. While net profit surged 43% YoY, revenue from operations grew 9% YoY to Rs 8,160 crore during the quarter under review. Its net interest income (NII) rose 28% YoY to Rs 3,127 crore, and net assets under management (AUM) grew 28% YoY to nearly Rs 2.52 lakh crore at the end of the quarter.
Tata Capital’s annualised operating expense on the average net loan book was stable at 2.3%, while the cost-to-income ratio improved to 36.1%. Annualised credit cost slightly reduced to 0.8%, while annualised ROA and annualised ROE rose to 2.5% and 14.6%, respectively, during the fourth quarter of FY26. However, these numbers exclude the firm’s motor finance business.
What the management said
Managing Director and CEO Rajiv Sabharwal said the company delivered a strong close to FY26, with sustained momentum and healthy growth across its businesses. “Asset quality continued to improve across segments, with both slippages and credit costs trending lower. The use of artificial intelligence remains a core strategic priority for the organisation. This year, our AI-first approach across the lending value chain delivered tangible results. Our portfolio monitoring platform has helped strengthen risk management and reduce our credit cost by ~14 bps year-on-year in FY26,” Sabharwal said.
“Our Voice Hub is being used across sales, service and retention, with voice AI agents now originating 15% of Direct Personal Loan business and carrying out 90% of welcome calls. AI-driven credit assessments now assist underwriting for 80% of our SME portfolio, compressing decision cycles and lifting credit manager productivity by 30%. Our Intelligent Document Processing engine has ingested and processed over 2 crore documents, fundamentally transforming how we originate, verify and quality-control at scale, across our credit and operations functions. These developments have helped reduce our cost-to-income ratio by 335 bps year-on-year in FY26,” Sabharwal added.
Should you buy, sell or hold Tata Capital shares?
JM Financial maintained its ‘Add’ rating on the shares of Tata Capital but increased its target price to Rs 380 apiece, implying an upside potential of nearly 12% from the stock’s previous closing price. The domestic brokerage noted that the company reported a healthy quarter, although its PAT growth missed the estimate by 4.7%.“This was driven by healthy AUM growth, improving asset quality and continued operating leverage. AUM grew +20% YoY / +6% QoQ (28% YoY ex-TMFL), in-line with their guidance, led by sustained traction in retail, corporate and housing finance. However, at the overall level, NIM performance remained relatively softer than expected (-9bps QoQ, -15bps JMFe) as asset-side repricing and higher corporate mix continued to weigh on yields, leading to a miss in our PAT estimates,” it added. JM Financial believes that improving earnings quality and motor finance normalisation support premium valuations.
HDFC Securities maintained its ‘Add’ rating on the shares of Tata Capital, but revised its target price to Rs 335 apiece. This implies a downside potential of nearly 2% from the stock’s previous closing price of Rs 340.60 apiece on NSE.
The domestic brokerage said that Tata Capital’s Q4 earnings were slightly ahead of estimates, driven by lower credit costs at 0.9%, ET Now reported. It added that the firm’s strong 28% AUM growth was led by SME and corporate segments, noting that asset quality remains strong, supported by conservative underwriting.
HDFC Securities revised Tata Capital’s earnings estimates upwards on higher loan growth. It said that the firm’s guidance of 23-25% AUM CAGR and 17-18% RoE remains key monitorables.
Tata Capital shares have gained around 4% in one month to close at Rs 340.60 apiece on Thursday.
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