JPMorgan has initiated coverage on Tata Capital, the financial services arm of the Tata Group, with an ‘Overweight’ rating and a Tata Capital target price of INR 370 per share, implying a potential upside of 15–16% from the company’s recent market levels. The global brokerage joins two other firms that have recently begun coverage on Tata Capital, both of which assigned “add” ratings with similar price expectations.
Strong Business Fundamentals Drive JPMorgan’s Optimism
In its latest note, JPMorgan described Tata Capital as “uniquely positioned to deliver system-leading growth and gain market share,” citing its robust liability profile, comprehensive product mix, and extensive omnichannel distribution network as key strengths. The brokerage believes these pillars will enable the company to sustain industry-leading performance as India’s credit market continues to expand.
JPMorgan also underscored Tata Capital’s ‘risk before growth’ philosophy, which it said has resulted in the company maintaining best-in-class Gross Non-Performing Asset (GNPA) levels and low credit costs. This conservative approach, the note said, enhances Tata Capital’s resilience in managing asset quality downturns without significant erosion in profitability.
Tata Capital: Profitability Outlook
While JPMorgan acknowledged Tata Capital’s growth prospects, it also pointed out short-term moderation in profitability metrics. The brokerage expects the company’s Return on Assets (RoA) to soften to 1.9% in FY26, primarily due to the ongoing merger with Tata Motors Finance. The integration process, though strategically sound, is likely to temporarily compress margins and efficiency ratios.
However, the report noted that the company retains ample scope for improvement through expanding Net Interest Margins (NIMs), lower credit costs, and a reduction in operating expenses. Over the medium term, these factors could support margin recovery and sustained earnings growth.
Earnings and Valuation Forecasts
JPMorgan forecasts net profit growth at a Compounded Annual Growth Rate (CAGR) of around 30% between FY26 and FY28, driven by improving scale, stronger underwriting standards, and favorable market dynamics. It estimates Return on Equity (RoE) in the range of 13.5%–14.7%, and an eventual improvement in RoA to around 2.1% by FY28.
At the current valuation of 2.6 times FY27 estimated Price-to-Book (P/B), the brokerage believes Tata Capital’s risk-reward remains attractive. Nevertheless, it cautioned that the successful integration of TMFL would be critical for the stock’s long-term re-rating potential.
Tata Capital Target Price: IPO & Market Context
Tata Capital’s IPO, held between 6 October and 8 October 2025, witnessed an overall subscription of 1.95 times, underscoring strong investor confidence.
- Issue Price: INR 310 – 326 per share
- Listing Price: INR 330.50 (+1.38%)
- Category-wise Subscription: QIB (3.42×), NII (1.98×), Retail (1.10×), Employee (2.92×)
The company’s stock ended 1.76% lower at INR 320.25 on 19 November 2025, below its initial public offering (IPO) price of INR 326. Since listing, the stock has traded within a narrow range, reflecting investors’ wait-and-see approach ahead of more quarterly performance visibility.
Despite the subdued short-term price movement, JPMorgan’s initiation adds to growing analyst confidence in the company’s trajectory, emphasizing scalability, credit discipline, and brand strength as long-term differentiators within India’s competitive non-banking financial sector (NBFC) landscape.
Conclusion
With its diversified financial services portfolio and prudent risk management, Tata Capital appears well-positioned to capitalize on India’s credit growth cycle. JPMorgan’s endorsement — marking it the third major brokerage to initiate coverage — reinforces market confidence in the company’s medium-term prospects.
If execution on integration and margin improvement stays on track, Tata Capital could indeed deliver the “system-leading growth” JPMorgan anticipates, potentially rewarding investors with a 15–16% upside over the next year.
For more details related to IPO GMP, SEBI IPO Approval, and Live Subscription stay tuned to IPO Central.