Tata Capital: Moving into high gear

LOWER FUNDING COST IS THE STRONGEST COMPETITIVE LEVER

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TATA CAPITAL IS emerging as a formidable long-term player in India’s fast-growing credit market, backed by a stronger balance sheet, improving profitability and a commercial-vehicle business no longer constrained by captive financing.

Yet the stock trades at a 20%-25% price-to-book discount to India’s largest NBFCs and roughly in line with far smaller lenders—a valuation the brokerage says understates the company’s scalability and structural advantages. Key risks include a softer macro backdrop and intensifying competition across retail and small-business lending. The brokerage reiterates its ‘Buy’ rating.