For years, the Tata Group has been synonymous with excellence across sectors, and now excitement is running high as its financial arm prepares for the biggest IPO of the year. Tata Capital, one of India’s largest NBFCs, is gearing up for its stock market debut. Backed by parent Tata Sons, the company is eyeing a multi-billion-dollar IPO.

Is Tata Capital’s long-awaited IPO a golden opportunity or a risk investors need to tread carefully around? Let’s take a look at the latest updates about this upcoming IPO, key risks and other key details –

Tata Capital IPO: Will it meet RBI’s September deadline

In 2022, Tata Capital was classified as an “upper-layer NBFC” by the Reserve Bank of India, which mandates a market listing within three years. The 3-year deadline ends this September. Though there is a buzz across the market that the IPO is likely in late September, we are awaiting official confirmation on the same.

Tata Capital IPO: Global roadshows indicates about the big launch

According to a PTI report citing people aware of the matter, Tata Capital has just wrapped up a series of investor roadshows across major global hubs, laying the groundwork for its blockbuster IPO. With the issue size pegged at around $2 billion (Rs 17,200 crore).

The IPO will comprise both a fresh issue and an offer-for-sale (OFS). Tata Sons, which holds the lion’s share of the company, will offload a portion of its stake, while International Finance Corporation (IFC), the only external shareholder, is also set to pare down holdings. The fresh capital raised will be used to strengthen Tier-I capital and fuel lending expansion.

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Tata Capital IPO: A tricky ride in the unlisted market

Even as buzz around the IPO grows, unlisted shares of Tata Capital have slipped over 20% in the past two months.

Market watchers point to the company’s recent rights issue, priced much lower at Rs 343 per share, as a trigger for the correction. The expectation is that the issue price will be closer to these levels.

Tata Capital IPO: Why this IPO matters

This offering carries more weight than just its fundraising numbers. It will be the first Tata Group IPO since the Tata Technologies in 2023, which saw bids worth Rs 1.57 trillion.

Tata Capital IPO: Financial performance and key risks

Talking of the financial performance of the company, the gross loans touched Rs 2.26 trillion as of March 2025. The annual growth averaged 37% over the past two years.

Furthermore, the profitability of the company has also improved. The net income rose to Rs 3,646 crore in FY25 and asset quality held steady at 1.9% gross NPAs.

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Yet, the draft red herring prospectus highlights several risks.

In the regulatory filing, the company noted, “Our provision coverage ratio was 58.5% as of March 2025, down from 74.1% in FY24 and 77.1% in FY23. Our inability to provide adequate provisioning coverage for non-performing assets may adversely affect our results.”

Another warning is around its loan book. “Unsecured gross loans made up 21% of total gross loans as of March 2025. Failure to recover such receivables in a timely manner may adversely affect our operations and financial condition,” the DRHP notes.

There are also regulatory concerns. Some debenture issuances by its subsidiaries were reportedly oversubscribed beyond prescribed limits. “Accordingly, we may be subject to regulatory action, including penal action, which may adversely affect our business and reputation,” the company cautioned.