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Informist, Thursday, Jul. 23, 2026

 

By Kabir Sharma

 

MUMBAI – Tata Capital is expected to report resilient earnings for the June quarter, supported by healthy loan growth, sustained demand across retail lending segments, and stable asset quality. While analysts expect pressure on the net interest margin due to rising cost of funds and competitive lending rates, robust business expansion and disciplined credit costs are likely to help the company post healthy year-on-year growth in both net interest income and net profit.

 

According to the average of estimates from five brokerages, Tata Capital is expected to report net interest income of INR 36.02 billion for the June quarter, up 25.7% year-on-year and 3.6% sequentially. The net profit is projected at INR 15.12 billion, representing a sharp 52.8% increase year-on-year and a modest 0.7% growth quarter-on-quarter.

 

Among the brokerages tracked, the most optimistic estimates, forecasting the highest net interest income of INR 36.89 billion and the highest net profit of INR 16.34 billion, are from JM Financial Institutional Securities. At the other end, Nomura Equity Research has the lowest net interest income estimate of INR 35.39 billion and the lowest net profit estimate at INR 14.01 billion.

 

A key focus for investors during the quarter will be the company's asset under management growth, which is expected to remain robust despite a challenging operating environment for its motor finance business. Analysts believe Tata Capital continues to benefit from strong demand across non-motor lending segments, allowing it to maintain healthy overall business momentum.

 

Tata Capital, which completed its merger with Tata Motors Finance in May 2025, saw its net assets under management, excluding motor finance, rise 28% on year to INR 2.52 trillion as of Mar. 31. Including motor finance, the assets under management rose over 6% on quarter to INR 2.77 trillion.

 

Kotak Securities expects Tata Capital to deliver 4.7% sequential and 23% annual asset under management growth, against the 3-7% sequential growth seen in the previous four quarters. The brokerage noted that while Tata Motors Finance continues to be relatively weak, the business excluding the arm is likely to post strong 27% year-on-year growth, reflecting sustained traction across core lending businesses.

 

Nomura Equity Research is similarly constructive on loan growth, estimating around 4% quarter-on-quarter assets under management expansion, indicating that business momentum remains intact despite macroeconomic uncertainties and competitive pressures in the lending market. Motilal Oswal Financial Services also expects consolidated assets under management to grow about 22% year-on-year. The brokerage believes management commentary on the sustainability of loan growth will remain key for investors.

 

While business growth is expected to remain healthy, margins are likely to face some pressure during the quarter. The company reported a net interest margin of 5.20% a quarter ago. Analysts attribute this primarily to higher funding costs and competitive pricing across lending products. Kotak Securities expects spreads to decline by around 15 basis points, citing a combination of a marginal increase in borrowing costs and some compression in lending yields. The brokerage nevertheless believes operating efficiencies should help cushion the impact of lower spreads on profitability.

 

Nomura has a similar view, projecting a 17 bps sequential decline in net interest margin. The brokerage believes funding costs have continued to edge higher even as competitive intensity limits the ability of lenders to fully pass on the increase to borrowers. Brokerages said investors will closely monitor the management's guidance on margin trends over the coming quarters, particularly amid changing interest-rate dynamics.

 

Despite margin compression, analysts expect Tata Capital's profitability to remain supported by improving operational efficiencies. Kotak Securities believes the company's cost-to-average assets under management ratio could moderate to 2.3%, compared with a range of 2.3-2.5% over the previous four quarters. The brokerage attributes this improvement largely to cost synergies arising from the integration of Tata Motors Finance, which should gradually begin to reflect in the company's operating performance.

 

Asset quality is expected to remain another key strength during the quarter. Most brokerages believe collection efficiency continues to remain healthy, limiting the need for elevated provisioning despite rapid loan growth. Kotak Securities expects annualised credit cost to remain 0.9%, broadly stable from the previous quarter and well below the 0.9-1.6% range seen over the last four quarters. The brokerage noted that stable collections and disciplined underwriting continue to support the company's credit performance.

 

Nomura is even more optimistic on provisioning trends, expecting credit costs to decline by 34 bps sequentially. However, it cautioned that year-on-year comparisons are less meaningful because the base period did not include the motor finance portfolio. Motilal Oswal, meanwhile, forecasts a slight increase in annualised credit costs to 1% from 0.9% in the March quarter. 

 

The company is scheduled to detail its earnings on Tuesday. Apart from headline earnings, management commentary on the integration of Tata Motors Finance is likely to be closely watched. Investors will seek updates on synergy realisation, operating efficiencies, and the trajectory of the combined business, particularly as the integration begins to contribute meaningfully to financial performance.

 

Of the five reports on the company available with Informist, four have a "buy" rating on the stock at an average target price of INR 381 per share. This is almost 10% higher than the current market price of INR 343.40 as of 1254 IST Thursday. One brokerage has a "hold" recommendation at a target price of INR 390 per share.

 

Following are the June quarter earnings estimates for Tata Capital from five broking firms in descending order of estimates of net profit in INR billion: 

 

Brokerage	Net interest income	Net profit
JM Financial Institutional Securities Pvt Ltd.	36.89	16.34
Kotak Securities Ltd.	35.52	15.76
Motilal Oswal Financial Services Ltd.	36.21	14.94
Nuvama Wealth Management Ltd.	36.08	14.57
Nomura Equity Research.	35.39	14.01
Average	36.02	15.12

 

End

 

Edited by Himanshi Gupta

 

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