Tata Capital, the financial services arm of the Tata Group, is gearing up for one of the biggest initial public offerings (IPO) in India. The company has filed its Draft Red Herring Prospectus (DRHP) confidentially with the Securities and Exchange Board of India (SEBI), as well as with stock exchanges BSE and NSE, through the pre-filing route. This move marks a significant step in Tata Capital’s journey towards going public.
Overview of Contents
Tata Capital IPO: What We Know So Far
- The IPO will consist of a fresh issuance of equity shares along with an Offer for Sale (OFS) by existing shareholders.
- The total issue size is expected to exceed ₹15,000 crore.
- A total of 2.3 crore shares will be offered, including new shares and shares offloaded by certain stakeholders.
- As of March 31, 2024, Tata Sons owned a 92.83% stake in Tata Capital.
- The company recorded a 34% year-on-year (YoY) growth in revenue, reaching ₹18,178 crore in FY24.
- The IPO will be managed by leading financial institutions, including Kotak Mahindra Capital, Citi, JP Morgan, Axis Capital, ICICI Securities, HSBC Securities, IIFL Capital, BNP Paribas, SBI Capital, and HDFC Bank.
Why is Tata Capital Going Public?
The Reserve Bank of India (RBI) classified Tata Capital as an upper-layer Non-Banking Financial Company (NBFC) in September 2022. As per RBI regulations, such companies are required to list on the stock exchange within 36 months of this classification. This IPO is a strategic move to comply with these guidelines and further strengthen Tata Capital’s financial position.
Understanding the Confidential DRHP Filing
Tata Capital has chosen the confidential pre-filing route, a strategy that allows companies to delay public disclosure of their IPO details until later stages. This method has been used by companies like PhysicsWallah, Swiggy, and Tata Play in recent years.
Financial Performance & Growth Prospects
- Tata Capital’s loan book has crossed ₹1 lakh crore, marking a 40% growth compared to the previous year.
- The company reported a profit of ₹3,150 crore from its lending operations in FY24.
- In the first half of FY25, Tata Capital posted a 21% increase in profit to ₹1,825 crore, indicating strong growth momentum.
- The company operates through over 723 branches across India, serving retail, corporate, and institutional customers.
Merger with Tata Motors Finance
Before the IPO launch, Tata Capital is awaiting final approval from the National Company Law Tribunal (NCLT) for its proposed merger with Tata Motors Finance. The Competition Commission of India (CCI) had already given its nod in September 2024. Once approved, Tata Motors is expected to hold a 4.7% stake in the merged entity.
What’s Next?
The IPO launch will depend on regulatory approvals and market conditions. If successful, this offering will be one of the largest in India’s financial sector and mark a significant milestone for the Tata Group, following the Tata Technologies IPO in November 2023.
With its strong financial performance and backing from Tata Sons, Tata Capital’s IPO is expected to attract significant investor interest. As the company moves closer to its public listing, more details will emerge regarding pricing, share allotment, and subscription timelines.