Strategy behind Tata Capital IPO to be launched in 2025: Tata IPO

Why is Tata Capital launching its IPO only in 2025?

After 20 years when Tata Group launched its Tata Technologies IPO, the Group is in the news again as it is all set to make its other wing available to the public. The news that is taking the internet by storm is tata capital IPO could hit the exchange market in 2025. With over Rs.15000 Cr worth, this could be the biggest IPO.

According to publicly accessible data, Tata Investment Corporation is one of Tata Sons' biggest stockholders, and Tata Capital is a subsidiary of Tata Sons.

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Tata Capital IPO Details

Moneycontrol said in its report that work on Tata Capital's IPO had already begun. This is a matter of anticipation of RBI's upper-layer rule regarding NBFCs. However, it has not been decided yet how big this IPO will be. However, it is being speculated that the company is preparing to bring an IPO of Rs.15,000 crore.

How TIC Shares Jumped By 8% Amid The News

In early trading on Tuesday, 24 December 2024, Shares of Tata Investment Corporation (TICL) surged up to 8% to Rs.7,060.15 on the BSE due to the news that Tata Capital is getting ready to conduct an IPO of about Rs.15,000 crore in 2025.

Tata Motors shares became very bullish as a result of the company's direct exposure to Tata Capital in terms of a 4.7% stake. This stake was developed after merging Tata Motors Finance into Tata Capital earlier this year, to consolidate all the financial services under a single umbrella for the group.

Tata Motors also holds a share of Tata Sons by nearly 3%, making the company a potential beneficiary of value unlocking at the holding company level.

The largest gainer was Tata Investment Corporation. The investment company, with stakes in many Tata Group investments, usually reacts to group-level financial developments by rising or falling.

Investors expect the fallout from listing Tata Capital to be ripple-like in its effects on valuations across Tata Sons and associated companies. According to March 2024, Tata Capital had an AUM standing at Rs.1,58,479 crore, much higher than the previous year with an amount of Rs.1,19,950 crore.

Today's rally follows those in Tata Chemicals and Tata Investment Corporation earlier in the year when rumors flew regarding a potential Tata Sons listing. Tata Sons is owned 65.9% by Tata Trusts, 18.4% by the Shapoorji Pallonji Group, 12.8% by Tata Group companies, and 2.8% by the Tata Family. Overall, this makes Tata Sons worth over Rs.11 lac crore.

(Source: Moneycontrol)

Tata Capital IPO date, Tata Sons IPO price, and Tata Sons share price could be available in due time.

Reasons (Possible) behind Tata Capital IPO in 2025

In these volatile times, essentially all market concerns and slowing economies have led to the postponement of IPOs for companies like boAt or Mamaearth. Still, there is no backing off for the Tata Capital from going public in 2025.

The company has a previously established profitable business model in B2B, which is expected to help it stand against competitive rivals. However, the queries are standing on the decision that why suddenly Tata Capital pulled itself into the listing in the next two years. The company could have some aspects affected by this move which are such under unlisted share market discussion as being Tata Capital share price. There could be many reasons behind this company decision, including:

Rearranging Operations

After years of establishing trust, Tata entered the profitable and reliable fraternity. Thus, through Tata Capital, it intends to restructure operations and divest its non-bank lending arm into the stock market. However, before that, the group announced the merger of its two subsidiaries into Tata Capital Ltd by the name of Tata Cleantech Capital and Tata Capital Financial Services Ltd, for which it got the nod from the Competition Commission of India. The IPO is intended to facilitate Tata Capital's reorganization plan.

Comply RBI Guidelines

As already stated above, Tata Capital has to get listed within three years of classification, as available under the RBI guideline. In this case, it has the support of Tata Sons and is treated at par with an upper-tier NBFC; hence it is a must for Tata Capital to have the IPO launched in the next three years. To avoid being blacklisted by the RBI, Tata Capital needs to make this change.

Public Investment

The company is on an expansion rage and focused on towns smaller than the metros, which Tata Capital believes will drive its forecast growth. To fulfill these growth ambitions, Tata Capital plans to public investment through its IPO. A strategy to go public in 2025 will help Tata Capital secure much-needed funding down the road.

Conclusion

This is a well-timed decision of Tata Capital, and it has to do with regulatory, operational, and expansion considerations, not to mention future stakeholder value creation and funding the company for growth. With a solid business model and strong market presence, anything short of success will be inadequate. Anticipation is at a fever pitch among investors for the company to capitalize on the opportunity.

DISCLAIMER: This is NOT any buy or sell recommendation. No investment or trading advice is given. The content is purely for educational and information purposes only. Always consult your eligible financial advisor for investment-related decisions.