Sebi approves Tata Capital’s Rs17,200 crore IPO draft; RHP filing likely in July: Report

Tata Capital, a subsidiary of Tata Sons, is preparing to launch one of the largest initial public offerings (IPOs) in India's financial sector, valued at Rs 17,200 crore. The Securities and Exchange Board of India (Sebi) has approved the company's draft papers for the public issue, filed confidentially, the Economic Times reported. This marks a significant step forward for Tata Capital in its journey to becoming a publicly listed entity. The approval from Sebi is a crucial milestone that sets the stage for the company to proceed with its public offering plans, reflecting regulatory confidence in its financial health.

Upon Sebi's clearance of the confidential draft red herring prospectus (DRHP), Tata Capital will make the draft public on the regulator's website before filing the red herring prospectus (RHP) prior to the IPO launch. The filing for the RHP is anticipated in the first week of July, although Tata Capital did not respond to inquiries by press time. This timeline suggests the company is on track to meet its regulatory obligations and market expectations. The process involves meticulous planning and coordination to ensure compliance with all regulatory requirements, thereby enhancing investor trust.

The IPO will consist of both a fresh issue of shares and an offer for sale by Tata Sons, which owns 93% of Tata Capital. The company filed the confidential DRHP on April 5. Under Reserve Bank of India (RBI) rules, Tata Capital and Tata Sons, both classified as "upper-layer" non-banking financial companies (NBFCs), are required to list by September 2025. This requirement underscores the importance of adhering to regulatory frameworks designed to ensure financial stability and transparency. The dual nature of the offering is expected to attract a diverse range of investors.

Upper-layer NBFCs are identified by the RBI based on specific criteria, necessitating adherence to stricter regulations and a mandatory stock exchange listing within three years. In January, the RBI selected 15 such NBFCs for 2024–25, including Tata Capital. The company's IPO preparation aligns with these regulatory requirements, highlighting its commitment to maintaining high standards of corporate governance. This classification positions Tata Capital among the leading financial institutions in India, capable of meeting rigorous standards.

Tata Capital's unlisted shares have appreciated 13.5% over the past six months, currently trading at approximately Rs ,050 each, valuing the company at about Rs 3.8 lakh crore. This increase reflects market confidence in Tata Capital's business model and growth prospects. In the March quarter, the firm reported a 31% increase in consolidated profit after tax, reaching Rs 1,000 crore, compared to Rs 765 crore in the same quarter the previous year. The consistent growth in share value and profitability underscores the company's robust market position.

For the full fiscal year 2024–25, Tata Capital recorded a profit of Rs 3,655 crore, up from Rs 3,327 crore in the previous fiscal year. Total revenue for the year rose significantly to Rs 28,313 crore from Rs 18,175 crore, reflecting the company's robust financial performance ahead of its public listing. This solid financial footing provides a foundation for the company's future growth and expansion plans. The impressive financial results indicate Tata Capital's strategic initiatives and operational efficiencies, which have been pivotal in driving its success.