Tata Capital Forecasts Strong Retail Loan Growth in FY25

Tata Capital, the financial services arm of privately owned conglomerate Tata Sons, anticipates its retail loan book to grow by 25-30 percent in 2024-25. This follows a 38 percent growth in the previous financial year, 2023-24.

The slightly lower expected growth rate is primarily due to the already high base. Also, the base has doubled over the past two years.

Current Retail Loan Growth

Tata Capital’s retail loan book accounts for 63% of the overall loan book of the non-banking financial company. The value of the overall loan book stands at Rs. 1,57,760 crores as of 31st March 2024. The retail loan book grew 38% from Rs. 72,758 crores in FY 2022-23 to Rs. 1,00,051 crores in FY 2023-24.

Some factors contributing to slightly slower growth at 25-20% compared to the previous year are

· The Unsecured Personal loan segment is on a downward trend across the industry.

· Retail loan base is already high for Tata Capital.

Expectations Of Senior Management

Tata Capital’s senior executive has said that Tata Capital’s retail loan book will still grow at a substantially higher growth rate than the industry. The Company expects that its retail loan book will remain a key growth driver.

Management expects support for healthy retail growth from below key areas:-

• Business and microfinance unsecured loans to grow 40-45 percent in FY 2024-25
• The two-wheeler segment is expected to grow at 45 percent.
• Anticipated growth for personal loans is forecasted to range between 25% to 30%.
• Penetrate new geographies by expanding to 1000 branches in FY 2024-25 from 723 branches in FY 2023-24.
• Focus on strategy driven by getting into other than the Tier I market for the two-wheeler segment.

Tata Capital Products and Services

Tata Capital, a subsidiary of Tata Sons, stands as the financial services arm of the esteemed Tata Group, functioning as a non-banking financial company. Within its portfolio, Tata Capital oversees several key subsidiaries, each contributing to its comprehensive suite of financial solutions:

· Tata Capital Housing Finance Limited

· Tata Capital Financial Services Limited

· Tata Cleantech Capital Limited

· Tata Asset Management Limited

These subsidiaries collectively offer a diverse array of financial services across various sectors. Their offerings encompass:

· Commercial Finance

· Consumer Loans, including those for home, education, personal, and car financing.

· Loans against Property

· Wealth Management Services

· Private Equity Services

· Distribution and Marketing of Tata Cards

Together, Tata Capital and its subsidiaries form a robust network delivering a wide range of financial products tailored to meet the diverse needs of its clientele.

Financials of Tata Capital

The Tata Group, a prominent conglomerate, boasts a collective market capitalization of USD 300 billion (INR 24 trillion) as of July 31, 2023. In the fiscal year 2022-23, the group recorded a revenue of $150 billion (INR 12 trillion).

Tata Capital, a key entity within the Tata Group, has demonstrated impressive financial growth, as reflected in several key metrics:

• Company's Assets Under Management (AUM) surged from ₹51,847 Crores in 2016-17 to ₹1,16,756 Crores in 2022-23.
• Revenue significantly rose, climbing from ₹6,324 Crores to ₹13,637 Crores.
• Profit After Tax (PAT) also experienced substantial growth, increasing from ₹459 Crores to ₹2,946 Crores.

These robust financial indicators underscore Tata Capital's strong financial position and bode well for the outlook of tata capital stock price.

Tata Capital Shares: A Worthy Investment?

Currently, Tata Capital shares are traded as unlisted in India, presenting investors with a distinctive opportunity. Backed by strong leadership and a diverse business portfolio, the company is strategically positioned for growth.

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