Tata Capital IPO: Update on Day 2

The Tata Capital IPO entered its second day of bidding with moderate participation across categories. According to data from the Bombay Stock Exchange, the issue has been subscribed 52 percent overall, indicating stable investor interest amid cautious market sentiment.

This IPO is being closely tracked as one of India’s most anticipated non-banking financial company (NBFC) listings. Investors are monitoring not only the subscription figures but also the grey market premium, which reflects short-term sentiment.

The Tata brand’s credibility, along with the company’s “AAA” credit rating and established financial profile, continue to drive confidence among long-term investors despite limited listing upside.

Key Takeaways

• The Tata Capital IPO was subscribed 0.52 times overall as of Day 2.
• Employee participation remains strongest with 1.58 times subscription.
• Qualified Institutional Buyers (QIBs) stand at 0.55 times, Retail Investors at 0.52 times, and Non-Institutional Investors (NIIs) at 0.45 times.

Subscription Breakdown So Far

The IPO opened to a steady response and gained momentum on Day 2. QIBs led the activity with 55 percent subscription, followed by RIIs at 52 percent and NIIs at 45 percent. The employee segment was oversubscribed by 58 percent, reflecting strong internal faith in the company’s future.

This diverse participation suggests that while institutional interest remains measured, retail investors are gradually showing confidence in the Tata brand. The issue’s performance on the final day will be key to determining its overall success.

Read Also: WeWork India IPO: Here Are the Details

Grey Market Premium (GMP) Trends

The grey market premium for Tata Capital has remained muted so far. At the current stage, the GMP reflects caution rather than exuberance, suggesting that listing gains may be modest.

Analysts attribute this to the IPO’s fully priced valuation, which leaves limited room for immediate appreciation. At the upper end of the price band, Tata Capital is valued around 4.2 to 4.3 times its post-issue book value, aligning closely with peers such as Bajaj Finance and HDB Financial.

Despite this, market experts note that long-term investors could benefit from steady value creation given the company’s robust fundamentals.

Expert Opinions and Brokerage Views

Financial analysts have generally maintained a positive but cautious stance on Tata Capital. According to Anand Rathi, the IPO is “fully priced” but offers long-term stability. They recommend subscribing for investors with a multi-year horizon rather than those expecting short-term listing gains.

Anshul Jain from Lakshmishree Investment also gave a “Subscribe” rating, noting that the IPO aligns with regulatory requirements mandating the listing of upper-layer NBFCs. He added that proceeds from the issue will strengthen the company’s Tier-I capital base, supporting expansion in high-potential segments like retail finance and green lending.

Valuation Snapshot

At the top price band of ₹326 per share, Tata Capital is valued at approximately 3.4 times its estimated June 2025 book value per share (BVPS). Post-merger with Tata Motors Finance Limited (TMFL), the company’s credit costs increased slightly, impacting its Return on Assets (RoA) and Return on Equity (RoE).

According to Antique Stock Broking, normalizing credit costs and achieving merger synergies will be critical for restoring RoE to about 15 percent, bringing Tata Capital in line with other high-performing NBFCs.

What the IPO Aims to Achieve

The funds raised will be used to augment the company’s Tier-I capital base, meeting regulatory capital adequacy requirements and supporting future lending growth. 

As per NBFC Scale-Based Regulations, Tata Capital must maintain a Capital to Risk-Weighted Assets Ratio (CRAR) of at least 15 percent and a minimum Tier-I capital of 10 percent.

This strengthened capital position will enable the company to expand lending operations and sustain momentum in consumer, SME, and vehicle financing segments.

Credit Ratings and Financial Strength

Tata Capital has maintained top-tier credit ratings across major agencies. It holds a “AAA” stable outlook from CRISIL, ICRA, CARE, and India Ratings. Its commercial papers are rated “A1+”, reflecting the firm’s low-risk profile and strong liquidity position.

These ratings, combined with Tata Group’s backing, add a layer of confidence for conservative investors seeking exposure to stable financial institutions.

GMP Sentiment: Why Investors Are Cautious

The grey market data suggests that investors are focusing more on fundamentals than speculative trading. The subdued GMP indicates a market consensus that valuations already reflect the company’s strength.

Market strategist Shruti Jain from Arihant Capital Markets noted that at current pricing levels, “there isn’t much left for listing gains,” but long-term prospects remain favorable due to Tata Capital’s diversified portfolio and disciplined risk management.

Final Thoughts

The Tata Capital IPO has drawn balanced participation across investor categories. The muted grey market premium shows that the issue is being valued more for its fundamentals than hype.

For long-term investors, the IPO represents an opportunity to own a stake in one of India’s most trusted non-banking financial institutions. With strong governance, solid credit ratings, and a clear expansion strategy, Tata Capital offers stability rather than speculative excitement.

However, short-term traders looking for quick listing profits may find the IPO less attractive given its full valuation and cautious GMP trends.

Read Also: India's Primary Stock Market: A Thriving Hub for IPOs

FAQs

What is the current Tata Capital IPO subscription status?

As of Day 2, the IPO is subscribed 0.52 times overall, with strong demand from employees and moderate participation from institutions and retail investors.

What is the Tata Capital IPO price band?

The price band is set between ₹320 and ₹326 per share.

What is the grey market premium (GMP) for Tata Capital?

The GMP remains subdued, reflecting limited expectations for large listing gains.

What is the use of IPO proceeds?

Funds will be used to strengthen Tata Capital’s Tier-I capital base and support lending growth across core business segments.

Should investors subscribe to the Tata Capital IPO?

Analysts recommend a “Subscribe for Long Term” rating, citing strong fundamentals but limited short-term upside.