Tata Capital IPO: Unlisted shares rally amid Rs 15,000 crore stake sale buzz

Tata Capital IPO: The demand for unlisted shares of Tata Capital has soared amid the proposed IPO of Tata Group company and third rights issue in three financial years. The company board of the Tata Capital has approved the proposal to launch its initial stake sale, along with a Rs 1,504 crore rights issue, leading to a rush towards pre-IPO markets, pushing the price higher.

According to the exchange filing, the IPO of Tata Capital shall include a fresh share sale of up to 23 crore equity shares and an offer-for-sale (OFS) by select existing shareholders of the company. However, this is subject to market conditions, receipt of applicable approvals, regulatory clearances and other relevant considerations, the filing added.

According to the dealers in the unlisted markets. shares of Tata Capital have jumped to Rs 1,000-1,050 range, from Rs 800-825 a week ago, signaling a 25-30 per cent appreciation in the prices. Following the sharp run-up, experts from the unlisted space believe that the stock is expensive and current valuations are not justified.

Hitesh Dharawat, Co-founder of Mumbai-based boutique firm Dharawat Securities said that price for Tata Capital has been rising higher since the announcement of its board meeting. The stock is very expensive even Rs 800 and such euphoria traps investors in the unlisted market. He expects the IPO shall come around Rs 400.

"Tata Capital is a strong company, backed by sound parentage but the current valuations are not justified. FOMO often leads to sharp up moves in the IPO-bound stocks, which we witnessed in Tata Technologies as well. However, hailing from the Tata Group portfolio, some value for the investors is likely to be left for the investors during the IPO time," Dharawat added.

If approved and launched with the given timeline of September 2025 listing, Tata Capital's IPO shall be the second primary offering by the leading conglomerate in two year. Prior to this, Tata Technologies Ltd was launched and got listed at the bourses in November 2023. However, it was after a two year decade when Tata Group launched any IPO post Tata Consultancy Service Ltd (TCS).

Prior to this, Tata Capital launched two rights issues in FY23 and FY24. It launched a rights issue with a record date of September 8, 2024 at a price of Rs 162.90 per share, while the second rights issue was launched with a record date of December 13, 2024 at a price of Rs 188.40 apiece.

Echoing the similar view, Abhay Doshi, Co-founder of UnlistedArena said that IPO buzz is pushing the stock price higher and the company is consistently raising funds via rights issue. "NBFC business is a risky bet but Tata's parentage is a major booster for the company. Tata Capital continues to remain expensive in terms of valuation and IPO is likely to come around Rs 400 levels," said.

Tata Capital, a non-banking financial company (NBFC), established in 2007 by Tata Group, provides a wide range of loans from housing to personal. The move by Tata Group is in line with RBI's mandatory requirement for 'upper layer' NBFCs to list within three years of being notified, that is by September 2025. The expected size of the IPO could be around Rs 15,000 crore.

Tata Sons directly owned 92.83 per cent stake in Tata Capital, while most of the remaining stake was held by other Tata group companies and trusts as on March 31, 2024. Besides this, Tata Capital has also approved a rights issue of Rs 1,504 crore and the record date for the same has been fixed at February 25, 2025.

For the quarter ended on December 31, 2024, Tata Capital reported a 7.7 per cent rise on a year-on-year (YoY) basis in its consolidated net profit at Rs 932.09 crore. The revenue from operation of the company increased 21.73 per cent YoY to Rs 5,943.75 crore.