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Motilal Oswal Report
Tata Capital Ltd. shares are likely to be in focus after Motilal Oswal initiated coverage on the stock with a ‘Neutral' rating and a target price of Rs 390, citing balanced risk-reward amid strong growth visibility but fully priced valuations.
Valuation and View
Tata Capital is one of India's leading diversified NBFCs, supported by the strong Tata brand, a diversified portfolio, and a consistent execution track record. The company has delivered robust growth while maintaining prudent risk management and healthy asset quality.
The brokerage expects Tata Capital to benefit from the large retail and SME credit opportunity, supported by its expanding distribution network, digital capabilities, strong liability franchise, and increasing focus on granular, higher-yielding segments. The turnaround of Tata Motors Finance Ltd., improving operating leverage, and moderating credit costs should further support profitability.
While the outlook remains favorable, the brokerage believes current valuations adequately reflect the company's medium-term growth and earnings potential, therefore the brokerge has initiated coverage on Tata Capital with a Neutral rating and a target price of Rs 390, based on 2.7x Mar'28E P/BV.
Key risks:
- Margin pressure from intensifying competition,
- higher-thanexpected stress in the unsecured portfolio leading to elevated credit costs, and
- slower-than-expected turnaround of Tata Motors Finance affecting profitability and return ratios
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