Tata Capital IPO Likely in 2025? Group Stocks Surge as Tata Corporation Soars Over 11%

More than a year after Tata Technologies’ blockbuster listing, Tata Group, led by N Chandrasekaran, is reportedly gearing up for the initial public offering (IPO) of its flagship financial services arm, Tata Capital. According to news reports, the conglomerate has initiated groundwork for this much-anticipated move.

Tata Capital, a non-banking financial company (NBFC) and a subsidiary of Tata Sons, is expected to launch an IPO exceeding ₹15,000 crore. While the final decision on the size of the offering is yet to be made, the deal is anticipated to be a landmark one.

RBI Mandates Listing for Upper Layer NBFCs

The proposed IPO aligns with the Reserve Bank of India’s (RBI) norms for ‘Upper Layer’ NBFCs. In September 2022, the RBI introduced a Scale-Based Regulation framework, categorising NBFCs into 4 layers—Base, Middle, Upper, and Top.

Under this framework, Tata Capital was classified as an upper-layer NBFC. These entities are required to list on stock exchanges within 3-years, making the September 2025 deadline crucial for compliance.

Tata Capital Financial Services, which merged with Tata Capital in January 2024, also falls under this regulatory classification, further necessitating the IPO plans.

Strategic Moves Ahead of the IPO

To streamline operations and boost efficiencies, Tata Capital recently underwent restructuring. In June 2024, the boards of Tata Motors Limited (TML), Tata Capital Limited (TCL), and Tata Motors Finance Ltd (TMFL) approved the merger of TMFL with TCL via an NCLT scheme of arrangement.

As part of the deal, TCL will issue equity shares to TMFL shareholders, giving Tata Motors a 4.7% stake in the merged entity. This strategic restructuring aims to strengthen Tata Capital’s financial position ahead of the IPO.

Market Performance and Peer Comparisons

Reports of Tata Capital’s potential IPO triggered strong buying interest in Tata Group stocks. Shares of Tata Investment Corporation surged over 11% on the NSE by 10:38 AM on December 24, 2024. Other stocks like Tata Motors and Tata Technologies also saw notable gains.

The rally mirrors investor enthusiasm witnessed earlier with Bajaj Housing Finance’s IPO, another Upper Layer NBFC. Bajaj Housing Finance debuted in the market on September 16, 2024, with a staggering 135% premium over its issue price, setting high expectations for Tata Capital.

What Lies Ahead For Tata Capital?

While details about Tata Capital’s IPO are still emerging, the move represents a strategic step by Tata Group to comply with regulatory norms and unlock value for investors. Given the group’s reputation and market presence, the IPO is poised to draw significant investor interest.

As the September 2025 deadline approaches, stakeholders are likely to keep a close watch on further announcements and updates surrounding this potential big-ticket listing.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.