Citi has initiated its coverage of Tata Capital Ltd. with a 'buy' rating, with a target price of Rs 450, implying an upside of nearly 32% to its current market price.
The brokerage expects AUM growth, a higher-yielding retail and SME mix, operating leverage, and a recovery in Motor Finance to drive profitability through financial year 2029.
Citi outlined that at an assets under management (AUM) of Rs 2.9 trillion, the Tata-group company has emerged as a scaled, diversified financial franchise where three earnings vectors are converging in tandem.
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These vectors include a healthy retail and SME mix expansion, operating expenditure leverage backed by Al and productivity gains, and normalisation of Motor Finance earnings.
"Underlying profitability outstrips headline optics, with ex-Motor Finance 10 ROA at 2.5% (vs. 2.3% reported). We forecast AUM CAGR of 24% through FY29E, ROA/ROE progression to 2.5%+/17-18% (CitiE PAT 5-9% ahead of consensus)," Citi noted.
Tata Capital is among the top picks for Citi in non-banking financial companies (NBFCs), along with Bajaj Finance Ltd., as both these franchises couple scale with earnings upside.
Some key catalysts that may work in favour of TCAP include high-yielding portfolio acceleration (2HFY27 onwards), strategic entry into gold loans (Yogloans acquisition), multiple yield levers, c opex efficiency, and Motor Finance turnaround.
Tata Capital Q1 FY27
Tata Capital Ltd.'s net profit for the first quarter of fiscal year 2027 jumped 56.3% year-on-year. The company posted a consolidated bottom-line of Rs 1,547 crore, as against Rs 990 crore in the year-ago period. Total income rose 15% to Rs 8,825 crore from Rs 7,692 crore.
Tata Capital's assets under management (AUM) grew 22% year-on-year to Rs 2,90,502 crore as of June 30, 2026, from Rs 2,37,508 crore a year earlier. Excluding the Motor Finance business, AUM increased 28% year-on-year, reflecting strong growth across the company's core lending segments.
The NBFC said retail and SME loans accounted for 85.4% of net AUM, while unsecured retail loans comprised 10.3% of net AUM. Tata Capital also expanded its physical presence to 1,491 branches across 27 states and Union Territories.
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