Tata Capital Gears Up for $2 Billion IPO, Marking a Milestone for the Tata Group

In a major development for India’s financial sector, Tata Capital, the financial services arm of the Tata Group, is preparing to launch its initial public offering (IPO), estimated to raise around $2 billion (approximately ₹15,000 crore).

This marks the Tata Group’s second public offering in two decades, following the successful listing of Tata Technologies in November 2023.

Strategic Move to Comply with RBI Regulations

The IPO comes as Tata Capital aligns itself with the Reserve Bank of India’s regulations requiring upper-layer non-banking financial companies (NBFCs) to list their shares by September 2025. Currently, Tata Sons, the holding company of the Tata Group, owns a 93% stake in Tata Capital.

To kickstart the process, the Tata Group has initiated discussions with Kotak Investment Banking, with plans to appoint additional bankers by January 2025.

The IPO is expected to enhance Tata Capital’s capital base, fueling its ambitious growth plans while offering investors a chance to participate in the company’s expansion.

Rising Market Valuation

In the unlisted market, Tata Capital has already attracted significant interest. Its shares have risen sharply, from ₹450 in December 2023 to around ₹900 in recent months, valuing the company at approximately ₹3.5 lakh crore based on the outstanding shares at the end of FY24.

Financial Performance Highlights

Tata Capital reported robust financial performance for the fiscal year ending March 31, 2024. The company’s revenue reached ₹18,178 crore, a 34% year-on-year increase, while net profit rose 12% to ₹3,315 crore.

The company’s diverse portfolio includes lending businesses such as Tata Capital Financial Services, Tata Capital Housing Finance, and Tata Cleantech Capital, along with investment and advisory services.

Positive Market Reaction

The announcement of the impending IPO has also had a ripple effect on related entities. Shares of Tata Investment Corporation, a holding company within the Tata Group, surged by up to 12% following reports of the IPO. This underscores the market’s optimistic outlook on the Tata Group’s broader business strategies.

A Landmark Moment

The Tata Capital IPO is set to be one of the largest offerings in India’s financial services sector and a significant milestone for the Tata Group.

It not only underscores the Group’s commitment to adhering to regulatory frameworks but also highlights its ability to leverage market opportunities for sustained growth.

Market analysts and investors alike will be closely monitoring further developments as Tata Capital takes the next steps toward its much-anticipated public debut.

With its strong financial performance and strategic positioning, the IPO is poised to generate significant interest and could set the tone for future listings in the financial sector.

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