Can Tata Capital Pull Off India’s Biggest IPO Of 2025? Here’s Why It Could Be Difficult
Tata Capital’s upcoming IPO is generating significant buzz in the Indian markets. As the first Tata Group company set to go public after Tata Technologies’ successful listing in November 2023, expectations are sky-high. However, despite its impressive financial performance and the Tata brand’s legacy, the road to a blockbuster IPO may not be as smooth as anticipated.
IPO Details and Market Position
Tata Capital, a non-bank lender, recently approved its IPO, which is expected to be one of India’s largest in 2025. The IPO includes a fresh issue of up to 23 crore shares, a rights issue worth ₹1,504 crore, and an offer for sale (OFS) by existing stakeholders. According to reports, the company seeks a valuation of up to $11 billion (₹91,000 crore), with an estimated fundraising target of $2 billion (₹17,450 crore).
This listing comes as part of the RBI mandate requiring “upper layer” NBFCs to go public by September 2025. Tata Capital, established in 2007, has positioned itself as a key financial services provider, offering diverse loans, including housing, personal, and business loans. With a network of over 900 branches, it has a strong presence across India.
Valuation Concerns. A Steep Ask?
While Tata Capital has demonstrated solid growth, market experts have raised concerns over its valuation noting that shares are currently priced at a level valuing the company at 13 times its book value, which appears expensive compared to industry peers.
Thus, will investors be willing to buy into such high valuations, particularly in a market that is already showing signs of overheating?
Moreover, in the unlisted market, Tata Capital’s stock has jumped from ₹800-825 to ₹1,000-1,050 recently, but brokerages expect it to list in the ₹500-700 range. This discrepancy suggests that investor sentiment may not fully support the lofty price expectations.
H1FY25 Financial Performance
The company’s financials show promising growth but also some red flags –
1) Net Profit was up 21% year-on-year (YoY) to ₹1,825 crore.
2) Loan Book expanded by 33%.
3) Net Interest Margin (NIM) including fees rose 6.4% to ₹5,208 crore.
4) Credit Cost increased to ₹581 crore, signaling a rise in risk.
While these figures show strong operational efficiency, rising credit costs indicate potential stress in loan recoverability. Therefore, investors might question whether the current performance is sustainable in a high-interest rate environment.
Market Challenges. Can It Withstand the Pressure?
The Indian IPO market has been booming, but signs of a slowdown are emerging.
Tata Capital’s IPO is competing in a market where investor appetite for high-priced listings is waning this despite recent successes like Hyundai Motor India’s record-breaking $3.3 billion IPO, but if we were to go by the broader sentiments it suggests an upcoming correction in valuations.
Additionally, global and domestic market conditions aren’t exactly in Tata Capital’s favor –
Firstly, India’s stock market has shown signs of volatility, with corrections expected in high-growth sectors. Secondly, RBI’s monetary policy remains tight, leading to higher borrowing costs for NBFCs. Thirdly, investor sentiment is shifting towards value stocks, with a focus on sustainable earnings rather than aggressive growth narratives.
Shareholding and the Tata Brand Advantage
Let’s look at the shareholding – Tata Sons holds a 92.8% stake in Tata Capital, with the remaining shares split among various Tata Group entities and external investors, including the International Finance Corporation (IFC).
Listed Tata Investment Corporation owns around 2%, and its stock surged 7% following the IPO announcement. Other Tata Group companies—Tata Chemicals, Tata Motors, Tata Consumer Products, and Tata Power—also have stakes in Tata Capital.
While the Tata name carries immense credibility, it alone may not be enough to justify Tata Capital’s premium valuation, particularly in a sector where NBFCs face stiff competition from fintech disruptors and traditional banks.
Is Tata Capital Detached From Current Market Reality?
The key question here is this -can Tata Capital pull off its ambitious IPO in a sluggish market?
Many analysts believe the current market scenario is far from ideal. India’s IPO boom has been fueled by an overarching storyline of high GDP growth, strong economic momentum, and a booming middle class. However, these factors do not eliminate fundamental concerns over valuation and market sustainability.
The price-to-earnings (P/E) multiples in many sectors, including financial services, are currently at inflated levels. Unless Tata Capital can justify its premium pricing with strong future growth and profitability, investors may be reluctant to buy into the hype. The only industries that continue to command sky-high valuations are those with significant entry barriers, patents, or unique market advantages – none of which apply to Tata Capital.
A Look at the Other Bigger Upcoming IPOs
The primary markets have had a sluggish start in 2025, with only a handful of mainboard IPOs hitting Dalal Street so far. After a record-breaking 2024 that saw some of the biggest listings in India, investors were eagerly awaiting a fresh wave of high-profile IPOs but the current market conditions have proved to be downer.
Still even though with market sentiment currently subdued, the upcoming big-ticket IPOs could provide the much-needed momentum to reinvigorate investor confidence.
Some of the major companies expected to list this year include LG Electronics India, Tata Capital, Ather Energy, and JSW Cement.
Let us take a closer look at the most anticipated IPOs of 2025.
1. PhonePe
The Walmart-owned digital payments and financial services giant, PhonePe, is gearing up for a mega IPO in 2025. Reports suggest that the company could seek a valuation of $15 billion through its public listing.
PhonePe has already redomiciled from Singapore to India and has roped in four investment bankers to manage the IPO process.
2. Ather Energy
Ather Energy, a key player in India’s electric two-wheeler market, is expected to go public as early as next month.
The company, backed by Tiger Global, received SEBI approval for its IPO in December 2024. The offering is expected to include a fresh issue of shares worth ₹3,100 crore and an offer-for-sale of 2.2 crore shares. The IPO proceeds will likely be used for business expansion, research, and development.
3. JSW Cement
JSW Cement is another major company set to enter the primary market this year with a ₹4,000 crore IPO.
The public offering is expected to be split evenly between a ₹2,000 crore fresh issue and a ₹2,000 crore offer-for-sale (OFS). The cement manufacturer received SEBI approval in January 2025, and is looking to use the IPO proceeds for expansion and debt reduction. This will be the largest cement IPO in India since Nuvoco Vistas’ ₹5,000 crore issue in 2021.
4. Reliance Jio
One of the most anticipated IPOs of the year, Reliance Jio Infocomm Ltd, is expected to launch in the second or third quarter of 2025.
The telecom giant, a subsidiary of Jio Platforms Ltd under Mukesh Ambani-led Reliance Industries, is reportedly looking to raise a staggering ₹40,000 crore through its IPO.
If successful, it will be India’s largest IPO ever, with reports suggesting a valuation of nearly $120 billion (₹10 lakh crore), while official details remain under wraps, investor interest is sky-high.
5. Zepto
Zepto, the quick-commerce sensation, is reportedly aiming to raise between ₹7,000 to ₹8,800 crore ($800 million to $1 billion) through its IPO in 2025.
The company has already secured approval from the NCLT to shift its domicile back to India and is expected to file its DRHP with SEBI by April 2025. As a key player in India’s fast-growing quick-commerce space, Zepto’s IPO is likely to attract significant attention from investors.
6. HDB Financial Services
The non-banking financial company, NBFC, HDB Financial Services, a subsidiary of HDFC Bank, is preparing for a massive ₹12,500 crore IPO.
The offering will likely consist of a ₹2,500 crore fresh issue and a ₹10,000 crore OFS by existing shareholders. The company filed its DRHP with SEBI in November 2024 and is expected to list later this year.
7. LG Electronics India
Electronics giant LG Electronics India is gearing up for a ₹15,000 crore IPO, which is expected to hit the market in March 2025.
The offering will be purely an OFS, with its Korean parent company selling around 10.18 crore equity shares. The company submitted its DRHP to SEBI in December 2024 and is now waiting for final approvals.
Other Potential IPOs to Watch
Apart from these high-profile listings, investors are also keeping an eye on IPOs from other major companies like Reliance Jio, Greaves Electric, and Lenskart.
The Last Bit
While Tata Capital’s IPO could be one of the largest in 2025, its success is far from guaranteed as valuation concerns, rising credit costs, and market volatility pose significant risks. The Tata brand’s credibility and the company’s solid performance might attract some investors, but whether it can sustain its expected valuation is another story.
If market conditions tighten, Tata Capital may have to temper its valuation expectations or risk a lackluster debut.
Investors should watch for further financial disclosures and macroeconomic signals before making a decision since an IPO’s success is not just about raising capital, it’s about delivering long-term value.
Moreover, with the IPO market off to a slow start in 2025, the success of these upcoming issues could be crucial in determining the direction of the market for the rest of the year. Investors will be watching closely to see if these companies can deliver on their valuation expectations and provide strong post-listing performances.
Will the upcoming IPO wave be enough to reignite market enthusiasm, we will see.
