Tata Capital rights issue at nearly one-third the unlisted price

Tata Capital Rights Issue Priced at Nearly One-Third of Unlisted Market Value.

Expert Analysis :

• Rights Issue Launch and Valuation Gap: Tata Capital will raise ₹17,200 crore (about $2 billion) and will start its rights issue on July 4, offering shares at ₹343, around 2.75 times lower than the ₹945 unlisted market price as of June 2.

• Merger Financial Impact: Tata Motors Finance had a loan book of Rs 37,961 crore and gross NPAs of 6.9% as of September 30, 2024.

• Tata Capital’s Asset Quality: Tata Capital reported a loan book of Rs 1.98 lakh crore in FY25, with gross NPA rising to 2.33% from 1.71% in FY24.

• Previous Rights Issue in 2025: In March 2025, Tata Capital raised Rs 1,504 crore via a rights issue at Rs 281 per share.

• Premium Over Previous Issue: The upcoming issue is priced at a 22% premium to the March rights offer, aligning with the pre-IPO valuation strategy.

• Grey Market Correction: Tata Capital’s unlisted share price fell 14% from Rs 1,075, impacted by HDB Financial’s IPO pricing of Rs 700–740.

• Pre-IPO Funding and Price Discovery: The rights issue, closing on July 13, is viewed as a pre-IPO round to reset market expectations and support price discovery.

• Listing Deadline Drives Market Activity: Active trading in Tata Capital’s unlisted shares began in June 2023 after it became clear the company must list by September 30, 2025.

• Grey Market Price Surge: Tata Capital’s unlisted share price rose from Rs 460 in June 2023 to a peak of Rs 1,075 in June 2025, driven by IPO anticipation.