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Informist, Thursday, Apr. 23, 2026

By Kabir Sharma and Gunjan Rajput

MUMBAI – Tata Capital has cautioned that its growth momentum could moderate going forward due to geopolitical uncertainties, particularly the ongoing conflict in West Asia, even as the company remains confident of delivering steady expansion in 2026-27 (Apr-Mar) backed by strong retail demand and improving asset quality.

Speaking during the post-earnings analyst call, Managing Director and Chief Executive Officer Rajiv Sabharwal said the external environment remains key, with risks emanating from global developments and inflation trends. "Growth momentum could moderate amid a more uncertain external environment," he said, adding that the West Asia conflict could have implications for inflation, energy prices and global financial conditions.  

The company flagged that higher-than-expected inflation could weigh on growth prospects, particularly if it impacts consumption and borrowing costs. Management also highlighted evolving El Nio conditions as a potential risk to rural demand. Despite these concerns, Tata Capital said it has not observed any material stress in its loan book so far due to geopolitical developments. The firm has been closely monitoring sectors such as micro, small and medium enterprises and commercial vehicles on a weekly basis but reported stable asset quality trends across segments.

Tata Capital reiterated that its strategy continues to be anchored around retail and MSME lending, which together account for about 86% of its assets under management. The company expects this share to inch up further in FY27, driven by strong momentum in housing finance, unsecured retail and SME loans.

Management said disbursement trends in unsecured segments such as personal loans, business loans and microfinance have picked up over the past few quarters, with the impact expected to reflect more meaningfully in loan book growth in FY27. Housing finance is also expected to remain a key driver, with the company targeting sustained high growth across affordable, near-prime and micro housing segments.

The company expects a significant improvement in loan book growth in FY27, supported by recovery in high-yield segments like unsecured retail and continued strength in housing finance, it said. While the motor finance portfolio saw contraction in FY26, the management indicated that disbursement momentum has picked up and growth should resume from the first half of FY27.

Tata Capital expects its cost of funds in FY27 to be lower than FY26, supported by repricing of liabilities and the lagged impact of earlier rate cuts. Although there was some uptick in incremental borrowing costs during March due to tight liquidity, the company believes overall funding costs will remain stable.

Asset quality remained strong during the quarter, with declining slippages and improving recovery trends. The company emphasised that it is "very focused" on bringing down bounce rates, which have already shown a declining trend, including in April. 

Tata Capital plans to expand its distribution network by 10–15% in FY27, building on its existing base of nearly 1,500 branches across the country. The strategy will combine physical expansion with deeper product penetration across existing branches, aimed at improving operating efficiency and supporting growth.

Looking ahead, the company reiterated its medium-term profitability goals, including achieving a return on assets of 2% by FY28. The company said it will continue to prioritise "sustainable, quality-led growth" while closely monitoring external headwinds.

The non-banking financial services company's net profit for the March quarter rose 43% on year to INR 15.02 billion. The company beat analysts' expectations of INR-14.64-billion net profit. Thursday, shares of the company closed nearly 1% higher at INR 340.60 on the National Stock Exchange.  End

Edited by Akul Nishant Akhoury

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