Tata Capital, a prominent nonbanking financial company (NBFC) in India, is gearing up for its much-anticipated initial public offering (IPO). The company has announced that retail investors will be able to subscribe to the IPO starting October 6, marking a significant milestone in its journey towards becoming a publicly traded entity.

IPO Structure

The IPO comprises two components:

• Up to 210.00 million new shares being issued
• Up to 265.80 million shares being offloaded by existing shareholders

This dual approach of fresh issue and offer for sale is designed to provide a balanced opportunity for both the company and its current investors.

Subscription Timeline

The IPO timeline has been strategically planned to cater to different categories of investors:

• Institutional and Anchor Investors: Subscription opens on October 3
• Retail Investors: Subscription begins on October 6

This staggered approach allows institutional investors to set the tone for the IPO before it opens to the broader retail market.

Significance for Retail Investors

The inclusion of a substantial retail portion in the IPO underscores Tata Capital's commitment to providing individual investors with the opportunity to participate in the company's growth story. Retail investors, who often look forward to IPOs from established brand names, will have the chance to become shareholders in one of India's respected financial services companies.

About Tata Capital

Tata Capital, as an NBFC, plays a crucial role in India's financial ecosystem. NBFCs are known for their flexibility and their ability to cater to various financing needs that may not be fully addressed by traditional banks. As part of the renowned Tata Group, Tata Capital benefits from a strong brand presence and trust in the Indian market.

The company's decision to go public may be seen as a strategic move to raise capital for expansion, strengthen its market position, and enhance its visibility in the financial services sector.

As the IPO date approaches, market observers and potential investors will be keenly watching for more details, including the price band and lot size. The success of this IPO could have implications not just for Tata Capital but for the broader NBFC sector in India.

Investors interested in participating in the Tata Capital IPO are advised to review the company's red herring prospectus and consult with financial advisors to make informed investment decisions based on their individual financial goals and risk appetite.

Tata Capital, the financial services arm of the Tata Group, has experienced a significant drop in its unlisted share price ahead of its planned Initial Public Offering (IPO). The company's shares have declined nearly 30% from their April peak, raising questions about investor sentiment and market conditions.

Sharp Decline in Share Price

Tata Capital's unlisted shares, which reached a high of ₹1,125 in April, have now fallen to around ₹785. This steep decline comes despite the anticipation surrounding the company's planned ₹17,200 crore IPO.

Factors Contributing to the Decline

Several key factors have been identified as contributors to this sharp drop in share price:

1. Volatility in Unlisted Markets: Lower liquidity in unlisted markets has led to increased volatility.

2. HDB Financial Services' Performance: Negative sentiment following the lackluster post-listing performance of HDB Financial Services has impacted investor confidence.

3. Valuation Concerns: Tata Capital currently trades at a price-to-book (P/B) multiple of 8.5X, which is significantly higher than its peers. For comparison, Bajaj Finance trades at 6X P/B, while Shriram Finance trades at 2X P/B.

4. Rights Issue Impact: The company's rights issue, priced at ₹343 per share, has influenced the current market price.

5. Sector-wide Weakness: The overall financial sector has experienced a downturn, with the Nifty Financial Services index declining by 4%.

Strong Financial Performance

Despite the share price decline, Tata Capital has reported robust financial results:

The company's estimated Assets Under Management (AUM) stand at ₹2.30 lakh crore.

Market Outlook

Analysts anticipate further consolidation in Tata Capital's share price until the actual IPO price band is announced. The upcoming IPO, valued at ₹17,200 crore, remains a significant event for both the company and potential investors.

As the financial services sector navigates through current market conditions, Tata Capital's IPO plans and their potential impact on the company's valuation will be closely watched in the coming months.