Motilal Oswal has started coverage on Tata Capital, the unlisted NBFC arm of the Tata Group, with a 'Neutral' rating and a ₹390 price target. The brokerage highlighted the firm's strong 29% AUM growth and its secure, granular loan portfolio. Investors should note that Tata Capital is an unlisted entity, meaning its shares are not traded on major exchanges like the NSE or BSE.
What Happened
Motilal Oswal has initiated coverage on Tata Capital, a major non-banking financial company (NBFC) backed by the Tata Group. The brokerage assigned the company a 'Neutral' rating and set a price target of ₹390 per share. This valuation, based on estimates for the fiscal year ending 2028, puts the price-to-book value (a measure of stock price relative to the company's net assets) at 2.7 times.
It is important for investors to note that Tata Capital is currently an unlisted entity. This means its shares are not available for trading on major public stock exchanges like the National Stock Exchange (NSE) or the Bombay Stock Exchange (BSE). Brokerage coverage on such firms often serves to track the company's financial health, sector standing, and potential valuation for those participating in private equity or unlisted share markets.
Business Growth and Performance
Tata Capital has shown significant scale in the financial services sector. By the end of March 2026, the company reported Assets Under Management (AUM)—the total market value of investments managed by the firm—at ₹2.77 trillion. Over the three years from 2023 to 2026, the company achieved an annual growth rate of roughly 29% in its assets, excluding motor finance. This growth underscores the company’s ability to expand its reach and maintain consistent operational performance in a competitive lending environment.
Portfolio Quality and Security
The brokerage pointed to the company’s loan portfolio structure as a key strength. The book is highly granular, meaning it is made up of a large number of small loans rather than a few massive ones. According to the report, roughly 98% of the loan accounts are for amounts under ₹10 million.
Furthermore, about 80% of the loan book is secured, typically backed by assets like property or vehicles, which adds a layer of safety for the lender. No single product type accounts for more than 20% of the total loans, which helps the company avoid the risk of a downturn in any one specific sector.
What The Valuation Suggests
Motilal Oswal projects that Tata Capital can maintain an asset growth rate of approximately 23% between the fiscal years 2026 and 2028. To justify a higher valuation in the future, the brokerage suggests the company needs to show sustained improvement in key profitability measures.
These measures include Return on Assets (RoA) and Return on Equity (RoE)—two critical metrics that show how efficiently a company uses its money to generate profit. The company is expected to continue its focus on digital lending and moving into higher-yielding, more profitable retail loan segments to boost these figures.
What Investors Should Track
Since Tata Capital is unlisted, the risks and monitorables differ from those of publicly traded peers like Bajaj Finance or Cholamandalam Investment and Finance Company. The primary monitorable is the company's ability to improve its profit margins while maintaining high-quality assets.
Investors involved in the unlisted space should keep an eye on:
- Profitability Trends: Whether the shift to higher-yield retail segments actually leads to better RoA and RoE.
- Asset Quality: Sustaining the granular and secured nature of the loan book as the company grows.
- Digital Execution: How well the company's ongoing investments in digital platforms translate into cost efficiency and new customer acquisition.
- Liquidity: Unlike listed stocks, shares of unlisted companies often have limited liquidity, meaning it can be more difficult to buy or sell them quickly.