In a move that’s jolting unlisted market participants, Tata Capital Ltd has set its IPO price band at Rs 310–326 per share, implying a valuation nearly 55% lower than the prevailing unlisted market price of Rs 735. This pricing for the Rs 15,511 crore public offering—opening October 6, 2025—comes after unlisted shares plunged 32% from April peaks of Rs 1,075 amid volatility, a July rights issue at Rs 343, and sector headwinds. At the upper band, the P/E ratio stands at 35.1x based on FY25 EPS, a premium to peers’ 26.6x average but a far cry from unlisted multiples of 8.5–11x P/B versus Bajaj Finance’s 5.9x.
For retail investors eyeing the Tata Group’s NBFC arm, grey market speculators facing lock-ins, and analysts tracking India’s IPO surge, this discount highlights the perils of unlisted hype. With nearly 30% of 2023–2025 IPOs listing below issue price, Tata Capital’s strategy prioritizes broad participation over premium pricing. Let’s explore the valuation gap, deal structure, and investor takeaways.
The Valuation Disconnect: From Rs 735 Unlisted to Rs 310–326 IPO Band
Unlisted shares, once buzzing at Rs 1,075 in June 2025, have corrected sharply to Rs 735—a 36% drop from peaks—driven by market jitters and the rights issue’s low floor. The IPO band’s 56% discount (at upper end) echoes HDB Financial Services’ 40% pre-IPO slide from Rs 1,200 to Rs 740, which listed at a mere 5% premium. This gap leaves unlisted buyers needing a 125% post-listing pop to breakeven, a tall order in volatile markets.
Comparative valuation table:
| Metric | Unlisted (Rs 735) | IPO Upper Band (Rs 326) | Discount/Implication |
|---|---|---|---|
| Market Cap (Post-IPO) | ~Rs 1.39 lakh Cr | ~Rs 1.39 lakh Cr (trimmed 5% from Rs 17,500 Cr est.) | 56% lower entry for new investors |
| P/E Ratio (FY25 EPS) | ~104x | 35.1x | Reasonable vs. peers’ 26.6x |
| P/B Multiple | 8.5–11x | ~4–5x (est.) | Aligns with Bajaj (5.9x), Shriram (4x) |
The trim from Rs 17,200 crore to Rs 15,511 crore reflects conservative pricing amid NBFC sector weakness.
Deal Structure: Rs 15,511 Cr OFS-Heavy Issue with Tata Sons Selling
The IPO comprises 47.58 crore shares: a fresh issue of ~21 crore (Rs ~6,500–7,000 crore) for capital augmentation and an OFS of 26.58 crore by Tata Sons (23 crore) and IFC (3.58 crore). Anchor bidding starts October 3, with listing on October 13.
Timeline overview:
| Event | Date |
|---|---|
| Anchor Bidding | October 3, 2025 |
| Issue Open/Close | October 6–8, 2025 |
| Allotment | October 9, 2025 |
| Listing (BSE/NSE) | October 13, 2025 |
Retail quota is 35%, with a minimum lot of ~46 shares (Rs ~15,000 at upper band).
Why the Deep Discount? Market Volatility and Peer Precedents
Factors fueling the gap:
- Unlisted Illiquidity: Low liquidity amplifies swings; recent 35% drop from April Rs 1,125 reflects NBFC caution.
- Rights Issue Anchor: Rs 343 floor signals conservative valuation, below unlisted quotes.
- Sector Headwinds: HDB’s modest listing premium and 30% of recent IPOs trading below issue price deter aggressive pricing.
- Peer Comparison: At IPO multiples, Tata Capital trades at a premium to Bajaj (5.9x P/B) but aligns post-listing expectations.
Analysts like Prashant Tapse of Mehta Equities warn of “stretched” unlisted premiums, advising caution for grey market players locked in for six months.
Investor Takeaways: Opportunity or Trap?
For retail investors, the discount offers entry at reasonable multiples, backed by Tata’s brand and Rs 2.3 lakh crore AUM (37% CAGR FY23–25). Unlisted holders face pain—125% upside needed—but long-term growth in lending (25+ products) could reward patience. Anchors like LIC may drive premiums, but volatility looms.
Outlook: Emkay targets Rs 3,500 post-listing if AI deals accelerate, but near-term listing at 5–10% gain seems likely.
Conclusion: Tata Capital’s Discounted Debut – A Prudent Play in Turbulent Times
Tata Capital’s IPO, valued 55% lower than unlisted prices, tempers hype with realism, offering value amid NBFC jitters. As anchors bid October 3, this could catalyze the largest 2025 financial IPO, blending Tata trust with growth potential. For unlisted speculators, it’s a lesson in liquidity risks; for new entrants, a calculated opportunity. ET
