Tata Capital debut: Emkay Global bullish on brand, diversified growth play

Tata Capital share price: The brokerage has initiated coverage on Tata Capital with an 'Add' rating and a September 2026 target price of ₹360, implying a 10 per cent upside over the issue price

Tata Capital Share Price: Brokerage firm Emkay Global Financial Services has initiated coverage on the Tata Group’s flagship non-banking financial company (NBFC), Tata Capital, with an ‘Add’ rating on the stock, betting on the company’s parentage, product offerings, and the promise of profitable growth.

 

The brokerage has set a target price of ₹360 for September 2026, implying a 10 per cent upside over the issue price of ₹326 per share. This rating is based on a FY27E price-to-book multiple of 2.8x.

 

Amidst this, the Tata Capital shares began their D-street journey by listing at ₹330 on the NSE and ₹330 per share on the NSE against the issue price of ₹326 per share, following the launch of its ₹15,511-crore initial public offering (IPO) — one of the largest in the NBFC space in recent years. 

 

According to Avinash Singh, senior research analyst at Emkay Global, the positive stance stems from multiple structural strengths, including the Tata Group’s strong parentage, a diversified product portfolio, and operating efficiencies that are expected to drive sustained profitability.

 

“Tata Capital’s AAA credit rating and access to abundant, low-cost debt make it well-positioned to emerge as a meaningful NBFC lender. Its diversified product mix and pan-India presence help mitigate concentration risks, while improving credit costs and operating leverage should drive a steady improvement in RoA and RoE to 2.2 per cent and 15.4 per cent, respectively, by FY28E,” said Singh.

 

Emkay expects Tata Capital’s earnings per share (EPS) to grow over 30 per cent between FY25–FY28, aided by a turnaround in the vehicle finance business and a higher share of secured loans.  ALSO READ | Tata Capital IPO Listing Today; here's what GMP hints for D-St debut

Tata parentage, diversified products key strengths

Emkay believes that Tata Capital’s group lineage provides strong competitive advantages — including superior access to financial and human capital, cost-efficient funding supported by a AAA credit rating, and wide brand recognition. These factors, the brokerage said, enable the company to cater to a broad customer base ranging from mass retail and MSMEs to large corporates.

 

Tata Capital operates in 27 states through a network of around 1,500 branches. Its most significant state contributes 14 per cent of total branches (over 200), while the single largest product accounts for only 17 per cent of total assets under management (AUM). Such diversification, Emkay said, has helped the NBFC quadruple its AUM over the past eight years, making it the third-largest private-sector NBFC despite several macro shocks, including demonetisation and the Covid-19 pandemic.

Strong growth outlook driven by operating leverage, better credit costs

Emkay expects Tata Capital’s retail and MSME franchises to benefit from improving credit demand and enhanced capital adequacy post-IPO. The brokerage sees the company’s net interest margin (NIM) expanding by 60–70 basis points to 5.8 per cent over FY25–FY28, driven by a rising share of high-yield assets, lower cost of borrowings, and better leverage.

 

Overall AUM is projected to nearly double to ₹4.3 trillion by FY28, while improving cost of funds and lower credit costs are expected to sustain profitability metrics.  ALSO READ | DMart Q2 show: Analysts flag margin strain despite steady revenue growth

Strong earnings growth but moderate returns

Emkay forecasts 24 per cent AUM CAGR and 30 per cent EPS CAGR over FY25–FY28, supported by operating leverage and improving asset quality in the vehicle finance segment. 

However, it expects moderate return ratios, with RoA and RoE reaching 2.2 per cent and 15.4 per cent, respectively, by FY28.

 

“Given the moderate return profile, the scope for re-rating in the near to medium term appears limited. Stock performance will largely be driven by book value compounding,” the brokerage added.

 

Key risks, Emkay cautioned, include delays in credit cost reduction in vehicle finance, and macroeconomic headwinds that could affect growth or asset quality.