Tata Capital IPO: Sebi approves confidential DRHP for ₹17,200 crore issue: Report

Mumbai, June 21 — In a significant move for India’s financial services sector, Tata Capital Ltd has reportedly received the Securities and Exchange Board of India’s (SEBI) approval for its confidential draft red herring prospectus (DRHP), paving the way for an initial public offering (IPO) estimated to raise around ₹17,200 crore. The long-anticipated listing of the Tata Group’s financial arm could mark one of the country’s largest public issues and a major step in the conglomerate’s efforts to unlock value from its key subsidiaries.

SEBI Greenlights Tata Capital’s Confidential Filing

According to people familiar with the matter, Tata Capital submitted its confidential DRHP earlier this year under SEBI’s pre-filing route, a relatively new mechanism introduced to allow companies greater flexibility in preparing for IPOs. The pre-filing route enables companies to seek regulatory feedback before making sensitive financial and operational data public.

SEBI’s nod for the ₹17,200 crore issue signals the start of formal IPO preparations. The public filing and subsequent investor roadshows are expected to follow in the coming months, with the IPO potentially hitting the market by the end of 2025 or early 2026.

IPO Structure and Fund Utilization

While the exact contours of the IPO are still under wraps, sources indicate that the issue will likely consist of a mix of fresh equity and an offer for sale (OFS) by Tata Sons, the holding company of the Tata Group. The fresh capital raised could be used to strengthen Tata Capital’s balance sheet, enhance its lending portfolio, and invest in digital transformation and fintech innovation.

Tata Sons is expected to dilute a minority stake in Tata Capital through the IPO, retaining strategic control while improving transparency and market discipline in its financial services arm.

A Major Milestone for Tata Group

The IPO of Tata Capital is being viewed as a landmark event in the Tata Group’s long-term strategic roadmap. It follows the successful listing of Tata Technologies in 2023 and is part of the broader initiative to unlock shareholder value and bring market-driven efficiencies to its portfolio companies.

“This IPO is not just about raising funds; it’s a signal to the markets that the Tata Group is committed to transparency, accountability, and value creation in all its businesses,” said Ajay Bagga, market veteran and former banker. “Tata Capital’s public listing could set a benchmark for other conglomerates exploring similar monetization pathways.”

Market Context: Timing the Bullish Sentiment

The Indian IPO market has seen strong momentum in recent quarters, buoyed by stable macroeconomic indicators, rising retail participation, and foreign institutional inflows. In FY24, over ₹70,000 crore was raised via mainboard IPOs, and the trend appears robust in FY25.

Analysts believe the timing of Tata Capital’s IPO is strategic. “Tata Capital is entering a market where investors are hungry for well-governed, growth-oriented financial services firms,” said Renu Ghosh, Head of Research at SMC Global Securities. “With strong backing from Tata Sons, its diversified lending book, and high credit ratings, Tata Capital is well-positioned to attract both institutional and retail investors.”

Tata Capital’s Business Overview and Financial Strength

Tata Capital is one of India’s leading non-banking financial companies (NBFCs), offering a broad spectrum of financial services, including consumer loans, commercial finance, infrastructure finance, wealth management, and investment advisory. As of FY24, it managed assets exceeding ₹1.6 lakh crore, with consistent double-digit growth in its loan book and a declining gross NPA ratio.

The company has posted healthy profits over the past few years, underpinned by a growing demand for retail credit, cost discipline, and a robust risk management framework. Analysts expect Tata Capital to command a premium valuation owing to its brand strength, diversified offerings, and robust governance.

Investor Outlook: A Blue-Chip Opportunity in the Making?

With a potential market capitalization running into several billions of dollars, Tata Capital’s IPO is expected to attract keen interest from domestic mutual funds, insurance companies, sovereign wealth funds, and foreign institutional investors.

“Tata Capital’s entry into the public domain could redefine the valuation matrix for NBFCs in India,” said Madhukar Bansal, independent financial advisor. “This isn’t just another IPO — it’s an opportunity to invest in the financial arm of India’s most trusted industrial group.”

Retail investors too are expected to show strong enthusiasm, considering the brand pedigree and long-term prospects of the business. Market experts recommend watching out for the price band and valuation metrics closer to the listing to assess entry levels.

As SEBI clears the confidential DRHP for Tata Capital’s ₹17,200 crore IPO, anticipation is building around what could become one of the most significant listings in Indian capital markets. For the Tata Group, this move is both symbolic and strategic — reinforcing its commitment to governance and value creation while giving the markets access to one of its most promising growth engines.

The IPO could well become a bellwether for the broader NBFC segment, ushering in renewed investor interest and setting benchmarks in valuation and performance expectations.