Tata Capital shares jump 5% post Q2 show; analysts say margin revival key

Tata Capital shares defied the market sentiment as it rallied 5 per cent in Wednesday's intraday deals following a healthy show in the second quarter of the financial year 2026-27 (FY27), with analysts calling margin pressure the "only real concern". 

The Tata group stock hit the day's high of ₹315.65 on the BSE, up 4.9 per cent against the last closing price of ₹300.80 amid higher than usual volumes. Over 5 million shares of the company had changed hands of the company on BSE and NSE combined at last check.

As of 11.50 AM, Tata Capital's share price was trading 3 per cent higher at ₹310 while the 30-pack Sensex was down 0.80 per cent at 73,000 levels around the same time. 

The company reported a 51 per cent year-on-year (YoY) growth in consolidated net profit to ₹1,660 crore for the September quarter of FY27 compared with ₹1,097 crore in the same period last year. 

The net interest margins (NIM) fell 9 bps quarter-on-quarter (QoQ) to ~4.9 per cent, the fourth straight quarterly decline. This was driven by a 13 bps QoQ rise in calculated cost of funds (CoFs) on EBLR and repo-linked bank borrowings, sharper than the 6–7bps rise for large peers. 

As a result, NII grew only 23 per cent to ₹3,700 crore despite strong AUM growth of 26 per cent. 

Management retained all its guidance. The company reiterated its medium-term AUM growth guidance of 23-25 per cent. It also expects NIM plus fees to remain stable or improve marginally in 3Q, with a stronger recovery in Q4 FY27, driven by pricing actions and an improving product mix. Check - TOP GAINERS NSE | TOP LOSERS NSE

Commenting on the earnings, JM Financial said that with growth and asset quality on track, a NIM turnaround is the key trigger for earnings upgrades. This, the brokerage said, should follow as PLR hikes flow through and high-margin AUM growth catches up with disbursals. 

The brokerage has maintained a 'BUY' rating with a target price of ₹400, valuing it at 2.8x FY28E BVPS for average RoA/RoE of 2.2 per cent/16 per cent over FY27–29E.

However, Motilal Oswal Financial Services (MOFSL) said that it has a 'NEUTRAL' rating, even though the outlook remains favourable, as current valuations adequately reflect the company’s near-term growth and earnings potential. It has a target price of ₹340.