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Key Points

Tata Capital's upcoming IPO reveals a stark decline in investor value, with shares trading at a dramatic 71% discount from previous unlisted market prices. The offering reflects broader challenges in the financial sector's initial public offerings, where high-premium grey market shares are entering public markets at significantly reduced valuations. This IPO is part of a regulatory mandate requiring upper-layer non-banking financial companies to go public within three years of classification. The listing, managed by a consortium of major investment banks, is expected to provide capital strengthening for Tata Capital's future growth.

Key Points: Tata Capital IPO Signals 70% Investor Loss Amid Market Challenges

  • IPO price band set at Rs 310-326 per share
  • Steep 71% value drop from peak unlisted market prices
  • Follows trend of reduced premiums in financial sector IPOs
  • Aligns with RBI's NBFC public listing requirements
2 min read

Tata Capital's IPO leaves unlisted investors with up to 70 pc loss

Tata Capital's IPO price band reveals significant value erosion for unlisted investors, highlighting broader market volatility in financial sector offerings.

"At its peak, Tata Capital's unlisted stock had traded at around Rs 1,125 - Original Article Report"

New Delhi, Sep 29

Tata Capital's initial public offering (IPO) has set its price band at Rs 310-326 per share, a move that has come as a disappointment for investors who had earlier bought its shares in the unlisted market at significantly higher prices.

At its peak, Tata Capital's unlisted stock had traded at around Rs 1,125. Compared to this, the IPO's upper band of Rs 326 represents a steep 71 per cent erosion in value for those early buyers.

Even at yesterday's levels, the unlisted share price was still trading at a 56 per cent discount to the IPO band, raising concerns that investors may not even recover their initial investment.

The situation mirrors other recent high-profile IPOs, where shares that once commanded strong premiums in the unlisted market entered the market at far lower prices.

HDB Financial Services launched its Rs 12,500-crore IPO at Rs 700-740 per share, far below the Rs 1,225 level seen in the grey market just a few months earlier.

For Tata Capital, the IPO opens for subscription on October 6 and will close on October 8, with anchor investor allocation scheduled for October 3.

The IPO lot size is 46 shares and in multiples thereafter. The proposed issue consists of 47.58 crore shares, including a fresh issue of 21 crore shares and an offer for sale (OFS) of 26.58 crore shares.

Tata Sons will offload 23 crore shares, while the International Finance Corporation (IFC) will sell 3.58 crore shares.

The funds raised from the IPO will be used to strengthen Tata Capital's Tier-1 capital, supporting its future growth and lending requirements.

The listing is also being undertaken in line with Reserve Bank of India's requirement that upper-layer non-banking financial companies (NBFCs) must go public within three years of classification.

Tata Capital was identified as an upper-layer NBFC in September 2022.

The IPO, managed by a consortium of investment banks including Axis Capital, Kotak Mahindra Capital, BNP Paribas, HDFC Bank, HSBC, Citigroup, ICICI Securities, IIFL Capital, SBI Capital Markets and JP Morgan India, is expected to list on the BSE and NSE on October 13.

- IANS

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Reader Comments

P
Priya S
️‍🩹 Feeling terrible for those who bought at Rs 1,125. That's a massive loss! But Tata group companies usually perform well long-term, so maybe this could be a good entry point for new investors?
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Michael C
As someone who follows Indian markets closely, this pattern is becoming too common. HDB Financial, now Tata Capital - regulators should look into grey market pricing transparency. The retail investor always suffers.
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Ananya R
My uncle invested heavily in unlisted Tata Capital shares last year. The family is really worried now. Hope the listing brings some recovery, but 70% down is heartbreaking 💔
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Sarah B
While I understand the disappointment, this IPO price seems more realistic. The earlier Rs 1,125 valuation was clearly speculative. Maybe this correction will bring stability to the stock post-listing.
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Vikram M
Tata Sons selling 23 crore shares tells you something. They know the right valuation. Unlisted market investors got carried away with the Tata brand name. Investment should be based on fundamentals, not hype.

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