Citi initiated coverage on Tata Capital with a “buy” rating and a price target of ₹450 per share, indicating an upside potential of 32% from current levels.
This is also the joint-highest price target on the street for Tata Capital. Ambit Capital also has a similar price target for the newest Tata Group listing.
Citi’s target values Tata Capital at 3.4 times its financial year 2028 estimated price-to-book-value, aided by a structurally improving return profile alongside sustained growth.
With Assets Under Management (AUM) of ₹2.9 lakh crore, Tata Capital has emerged as a scaled, diversified financial franchise where three earnings vectors, Retail, SME mix expansion, and opex leverage (AI / productivity gains) are converging in tandem.
According to Citi, Tata Capital’s underlying profitability outstrips headline optics, with the first quarter return on assets (RoA), excluding Motor Finance, at 2.5% compared to 2.3% that was reported.
Citi has forecast Tata Capital’s Assets Under Management (AUM) to grow at a compound annual growth rate (CAGR) of 24% through FY29, return on assets (RoA) and return on equity (RoE) to progress towards 2.5% and 17% – 18%, respectively. Citi’s profit after tax (PAT) estimates for Tata Capital are 5% – 9% ahead of the consensus.
The brokerage said the key catalysts for Tata Capital going forward are high yielding portfolio acceleration (second half of FY27 onwards), strategic entry into gold loans (Yogloans acquisition), multiple yield levers, opex efficiency and the turnaround of the Motor Finance business.
Tata Capital reported its first quarter earnings in July. Its profit increased 56% to ₹1,547 crore from ₹990 crore last year. Its total income increased 23% to ₹4,455 crore from ₹3,626 crore. Its AUM was up 22% at ₹2.9 lakh crore from ₹2.37 lakh crore in the year-ago period.,
Of the 14 analysts who have coverage on Tata Capital, 12 have a “buy” rating and two have a “hold” rating.
Shares of Tata Capital are trading 0.9% higher on Wednesday, cooling off from opening highs at ₹344.35. The stock still trades around its IPO price of ₹326 apiece.
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