Tata Capital IPO: Tata Group's ₹15,000 Cr Listing in 2025

India's most extensive tech-to-energy conglomerate, the Tata Group, is set to launch another significant IPO in 2025. However, this time the anticipation is not around the much-discussed Tata Sons IPO but rather the financial services arm, Tata Capital. Reports suggest that the IPO could be valued at approximately ₹15,000 crore, making it potentially the largest IPO in the group’s history.

Should the Tata Capital IPO materialize in 2025, it would be the Tata Group's second listing in recent years, following Tata Technologies' successful IPO in 2023.

According to insiders, “Preparations for the IPO are underway to align with the RBI’s requirements for 'upper layer' NBFCs. While a final decision on the issue size is pending, it is expected to be a major offering exceeding ₹15,000 crore.” Legal and financial advisory support has been enlisted from Cyril Amarchand Mangaldas and Kotak Mahindra Capital, with additional investment banks likely to join. The IPO will reportedly comprise both primary and secondary share issues.

Tata Capital Limited (TCL), a subsidiary of Tata Sons Private Limited, is the Tata Group’s flagship financial services entity. Operating as a non-banking financial company (NBFC), Tata Capital provides a wide range of services, including commercial finance, consumer loans, wealth management, and the distribution of Tata Cards. As of October 28, 2024, the company’s loan book stood at ₹1,76,536 crore, with a profit after tax of ₹1,825 crore and a customer base exceeding 5.2 million across 900 branches.

Earlier in August, the Reserve Bank of India approved the merger of Tata Capital Financial Services Limited (TCFSL) and Tata Cleantech Capital Limited (TCCL) into Tata Capital Limited. This amalgamation transitioned Tata Capital from an NBFC-Core Investment Company to an NBFC-ICC. The certificates of registration for TCFSL and TCCL were subsequently surrendered and cancelled, with a new NBFC-ICC certificate issued to Tata Capital.

The Tata Capital IPO comes amid earlier speculation about a potential IPO for Tata Sons in 2025, following its inclusion in the RBI's 'Upper Layer' category under Scale-Based Regulations for NBFCs. Despite being on the RBI's radar, Tata Sons is reportedly exploring alternative strategies to avoid listing.

If executed, Tata Capital's IPO could surpass the Tata Technologies IPO of November 2023, valued at ₹3,042.51 crore, as well as the landmark Tata Consultancy Services (TCS) IPO of 2004, which raised ₹4,713.47 crore. The group is also rumored to be considering IPOs for other subsidiaries, including Big Basket, Tata Passenger Electric Mobility, Tata Projects, Tata Play, and Tata Autocomp Systems.

Tata Sons, the principal investment holding entity of the group, holds a 66% equity share capital, with proceeds supporting philanthropic causes such as education, healthcare, and arts. The conglomerate’s renewed focus on IPOs aligns with RBI mandates requiring 'upper layer' NBFCs to list within three years of notification, a deadline set for September 2025.

Recent market activity highlights the success of similar IPOs, such as Bajaj Housing Finance’s debut, which witnessed a 135% premium over its issue price on opening day. Tata Capital's strong financial performance, combined with consistent capital infusion by Tata Sons, underscores its growing prominence within the group’s portfolio.