Tata Capital shares below IPO price, but Kotak sees 12% upside

Tata Group stock Tata Capital has received a coverage initiation from brokerage firm Kotak Institutional Equities with an 'Add' rating on Monday, December 8.

The brokerage has ascribed a price target of ₹360 on the stock, which implies a potential upside of 11% from current levels.

The brokerage wrote in its note that Tata Capital is now India's third largest non banking financial company, with a loan book of ₹2.44 lakh crore as of the second quarter of FY26.

Kotak said the company's well diversified portfolio, led by retail lending, which accounts for 61% of its book, along with its rapidly expanding physical footprint, is expected to drive a 21% compound annual growth rate in gross loans between FY2025 and FY2028.

Kotak added that the turnaround of the loss making business of Tata Motors Finance Ltd., recently merged into Tata Capital, along with improving leverage, should result in a 29% compound annual growth rate in earnings per share over FY25 to FY28.

Return on equity, which stood at 12.5% in FY25, is estimated to rise to 15.7% by FY28, or 15.1% excluding the impact of the TMFL merger.

Kotak has become the fourth brokerage to initiate coverage on Tata Capital, with the previous three having 'Add' ratings on the stock with similar price targets.

Shares of Tata Capital are trading 0.92% lower on Monday at ₹322.45 after making a day's high of ₹327.80. The stock is down nearly 3% on a year-to-date basis, and is also trading below its IPO price of ₹326.