Mumbai: Tata Capital is now valued at ₹1.5 lakh crore on the platform for unlisted stocks, making the mutual fund and lending arm of India’s most valuable conglomerate the third biggest non-bank lender by market capitalisation – just after the Bajaj twins.
Like Tata Technologies, Tata Capital has drawn significant investor interest in the unlisted market since the introduction of the stock there about six months ago. The scrip trades in the range of ₹400 to ₹425.
Bajaj Finance currently boasts a market capitalisation of ₹4.47 lakh crore, while Bajaj Finserv and Jio Financial Services command market capitalisations of ₹2.53 lakh crore and ₹1.37 lakh crore, respectively.
Market experts attribute the strong demand for Tata Capital shares to the performance of the IPO-bound Tata Technologies, in the unlisted market. It is trading at a premium of ₹300 a share compared with its anticipated issue price.
According to Narottam Dharawat of Mumbai-based Dharawat Securities, Tata Capital shares are currently traded privately at ₹400-425 apiece. He added that the stock, which started trading five months back, hit a record high of ₹500 in August. “This optimism is driven by the expectation of a listing occurring in the next 12-18 months at a substantial premium,” he added.
In compliance with RBI guidelines, Tata Capital must conduct an initial public offering (IPO) by 2025. In September 2022, the central bank classified Tata Capital Financial Services as an upper-tier non-bank lender within the systemically important NBFC category. Consequently, the company must establish a board-approved policy for adopting the enhanced regulatory framework. It must list within three years from its classification as an ‘upper layer’ non-bank lender.
As per the market participants, the stock is traded nearly nine times the book value per share and is expensive in the sector. “The stock is trading at a premium compared to its industry peers, and investors should exercise caution at these price levels,” said Sambhav Aggarwal, director of Shri Parasram Holdings, a Delhi-based firm that deals in listed and unlisted shares. “Considering the recent rights issue announcement at ₹162 per share, investors should be mindful of the current substantial premium.”
Tata Capital is the holding company for the group’s three lending arms – Tata Capital Financial Services, Tata Capital Housing Finance and Tata Cleantech Capital – and three investment and advisory businesses: Tata Securities, Tata Capital Singapore and Private Equity.
In FY23, the company issued and allotted 44 million shares of ₹10 each at a premium of ₹125.10, aggregating to ₹593.80 crore, on a ‘rights basis’ to the existing equity shareholders.
