Tata Capital is a part of the Tata group, one of the largest business groups in India. This provides strong support on the liabilities side, as well as access to equity capital. Further, it provides significant opportunities for cross-sell of lending products within the group.
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HDFC Securities Institutional Equities
We initiate coverage on Tata Capital Ltd. with an 'Add' and a RI-based target price of Rs 344 (implying 2.7x Sep-27 adjusted book value per share). Our implied multiple is at 35% discount to Cholamandalam and 23% premium to L&T Finance.
Tata Capital has transitioned into a diversified franchise post pandemic under Mr. Rajiv Sabharwal with high contribution of retail/SME segments.
This has also translated into significantly improved profitability compared to pre-pandemic levels.
Having completed the merger with Tata Motors Finance Ltd. (and the earlier amalgamation of Tata Capital Financial Services Ltd. and Tata Cleantech Capital Ltd. into Tata Capital), the company is poised to deliver steady operating performance during FY26-FY28E backed by a strong brand, growing distribution network and improving operating efficiencies.
However, we expect the growth momentum to moderate during FY26-FY28E driven by increasing base, elevated competitive intensity and enhanced focus on overall profitability.
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