Tata Capital reported a 51% increase in second-quarter net profit to ₹1,660 crore, supported by higher interest income and reduced bad debt charges. The company’s total loan book surpassed the ₹3 lakh crore milestone, with a strategic shift toward increasing exposure in SME and corporate lending segments. This result reflects the firm's efforts to diversify its portfolio while maintaining tighter risk controls.
Tata Capital has reported a strong performance for the second quarter of the 2027 fiscal year, with consolidated net profit jumping 51% to ₹1,660 crore. This growth was supported by a 23% rise in net interest income, which reached ₹3,696 crore. The company’s ability to grow its top line while keeping costs in check has been a significant driver of the recent results.
The most notable change in the company's performance is the expansion of its loan book, which crossed the ₹3 lakh crore mark as of September 30. This growth is accompanied by a deliberate shift in the company’s business strategy. The firm has reduced its concentration in the motor finance segment, which now accounts for 7.7% of the total loan book, and trimmed its retail loan exposure (excluding motor finance) to 49%. Instead, the management has increased the company's presence in the SME and corporate lending segments, which now comprise 28.7% and 14.6% of the portfolio, respectively.
This shift toward corporate and SME lending is a significant move for an NBFC, as these segments often carry different risk and return profiles compared to the high-volume retail lending common in the sector. Investors may watch how this new mix performs across different economic cycles. Historically, corporate and SME lending can be more sensitive to industrial growth and economic slowdowns than the typical retail loans, such as home or personal loans.
Profitability also received a boost from a 16.6% decline in loan loss provisions, which fell to ₹645 crore. Lower provisions typically signal that the company’s management believes the quality of its loan book is stable. The firm’s subsidiary, Tata Capital Housing Finance, remained a key contributor to the overall financial health of the group.
In the broader NBFC sector, lenders are currently navigating a stricter regulatory environment, particularly regarding unsecured lending. The Reserve Bank of India has frequently advised non-banking financial companies to maintain strong capital buffers and conservative lending standards. Tata Capital’s move to diversify away from certain retail segments could be seen as an effort to align with these broader sector trends while seeking growth in the commercial space.
The key monitorable for the coming quarters will be the asset quality of the SME and corporate segments. As the company expands this portion of its loan book, its ability to maintain healthy margins while avoiding bad loans will be crucial. Additionally, with the broader financial sector facing increased scrutiny, the company’s ability to balance rapid loan growth with strict risk management will define its future performance.