Tata Capital Ltd. has reported robust financial results for the second quarter of Fiscal Year 2027, exceeding market expectations and reinforcing its confidence in achieving ambitious targets set for FY28. The non-banking financial company (NBFC) highlighted strong growth across key metrics, driven by diversified lending and improved operational efficiencies.
Tata Capital Exceeds Q2 Estimates, Reaffirms FY28 Goals
For Q2 FY27, Tata Capital's profit after tax (PAT) surged by 51% year-on-year to Rs 1,660 crore, significantly outperforming estimates. This strong performance was primarily supported by healthy fee income and reduced provisioning requirements. Assets under management (AUM) expanded by an impressive 26% annually, reaching Rs 3,08,030 crore as of September 30, 2026. The company's return on assets (RoA) stood at a healthy 2.3%.
Following these results, Tata Capital expressed strong confidence in meeting its comprehensive FY28 guidance. This includes targets for growth, cost-to-income ratio, credit costs, RoA, and return on equity (RoE). The company's strategy hinges on diversified growth, resilient asset quality, and leveraging operational efficiencies. It reiterated its medium-term AUM growth guidance of 23-25%.
Brokerage Outlook and Price Targets
The strong Q2 performance and reaffirmed guidance have prompted leading brokerages to update their views and price targets for Tata Capital's stock.
Nuvama Maintains 'Buy' Rating
Nuvama has retained its 'Buy' rating on Tata Capital, adjusting its target price slightly to Rs 400 from Rs 415. The brokerage believes Tata Capital is entering a new phase of accelerated growth, with profitability expected to strengthen significantly between FY27 and FY29. Nuvama projects RoA to be in the range of 2.3-2.5% and RoE between 15-18% during this period, attributing this to improving margins, operating leverage, and controlled loan-loss provisions.
MOSL's Neutral Stance with Growth Projections
MOSL has maintained a 'Neutral' stance on the stock, setting a target price of Rs 340. While acknowledging near-term risks from rising funding costs, MOSL anticipates that timely pricing actions, a favorable asset-liability mix, and an increasing contribution from high-margin businesses will support net interest margin (NIM) recovery and RoA improvement. The brokerage estimates a Compound Annual Growth Rate (CAGR) of 24% for AUM and 34% for PAT over FY26-28, projecting RoA and RoE to reach 2.2% and 15% respectively by FY28.
Systematix Sees Tata Capital as Preferred Pick
Systematix also maintained its 'Buy' rating and a target price of Rs 400, reaffirming Tata Capital as its preferred pick within the NBFC sector. The brokerage's earnings estimates for FY27 and FY28 remain 5% above Bloomberg consensus, reflecting confidence in Tata Capital's execution capabilities, expected gradual margin improvement, and a stable asset-quality outlook. Systematix has kept its valuation multiple at 2.7 times the estimated adjusted book value for FY28.
Q2 Financial Highlights
- Profit After Tax (PAT): Increased 51% year-on-year to Rs 1,660 crore in Q2 FY27, up from Rs 1,097 crore in the prior year period.
- Gross Loan Book: Expanded 27% year-on-year to Rs 3,03,739 crore, crossing the Rs 3 lakh crore milestone.
- Assets Under Management (AUM): Grew 26% annually to Rs 3,08,030 crore. Excluding motor finance, AUM growth was even stronger at 32% year-on-year.
- Net Total Income: Rose 24% year-on-year to Rs 4,676 crore.
The company's robust Q2 performance underscores its strategic positioning and operational strength, providing a solid foundation for achieving its ambitious long-term financial objectives.