Tata Capital IPO likely next month but unlisted shares down 8% in 1 month

Tata Capital is preparing a $2 billion initial public offering ahead of the Reserve Bank of India’s September 30 listing deadline, but sentiment in the unlisted market seems to have cooled, with the company’s unlisted shares slipping more than 8% over the past month.

The stock is currently trading around Rs 795 in the unlisted market, down from Rs 865 a month ago and 27.4% below its October 2024 peak of Rs 1,095, according to UnlistedZone.

IPO filing and structure

The financial services arm of Tata Group is on an investor roadshow for the planned share sale, ETNow reported on Thursday, citing sources. The offering will include about 210 million new shares and 266 million shares offered by existing investors.Tata Sons, which owns 88.6% of Tata Capital, intends to offload 230 million shares, while International Finance Corporation will pare 35.8 million shares from its 1.8% holding.

Earlier this month, the company submitted updated draft papers for up to 47.58 crore equity shares. The filing detailed a fresh issue of 21 crore shares and an offer for sale of 26.58 crore shares, according to the Draft Red Herring Prospectus.

One of India’s largest financial listings

If completed, the listing would be among the largest ever in India’s financial sector and the Tata Group’s second in recent years, following Tata Technologies’ November 2023 debut.The IPO will also help the company meet the RBI’s mandate requiring upper-layer nonbanking financial companies to list within three years of designation. Tata Capital was classified in this category in September 2022.

Earnings momentum

For the June quarter, Tata Capital reported consolidated net profit of Rs 1,040.93 crore, more than double the Rs 472.21 crore a year earlier. Total income rose to Rs 7,691.65 crore during the quarter from Rs 6,557.40 crore.

A wide syndicate of banks is managing the issue, including Axis Capital, Kotak Mahindra Capital, BNP Paribas, HDFC Bank, HSBC Securities and Capital Markets (India), Citigroup Global Markets India, ICICI Securities, IIFL Capital Services, SBI Capital Markets and JP Morgan India.

Also read | Tata Capital to launch $2 bn IPO ahead of Sept 30 RBI deadline: Report

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