Analyst Concall
Tata Capital sees retail, SME loans as key growth drivers
This story was originally published at 22:22 IST on 28 July 2026
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--Tata Capital: Bank credit remains more attractive comapred to bond mkts
--CONTEXT: Comments from Tata Capital mgmt in post earnings analyst call
--Tata Capital: Expect AUM disbursement growth gap to narrow
--Tata Capital: Effort is to increase margin on all products
--Tata Capital: Expect more growth on retail, MSME loans
--Tata Capital: Gold loan application shared with RBI, waiting for approval
--Tata Capital: We expect retail and SME loans to be between 80-85% of book
--Tata Capital: Well capitalised till Jul-Sept FY29
--Tata Capital: Bounce rates continue to improve month-on-month
--Tata Capital: Expects cost of funds, margins to improve by 10 bps in FY27
--Tata Capital: Expect affordable bike AUM to grow by 100% FY27, 50-70% FY28
By Kabir Sharma and Meera Nair
MUMBAI – Tata Capital expects retail and small and medium enterprises lending to remain key growth drivers over the coming years as the management aims to improve margins across products while benefiting from a gradual recovery in high-yield loan growth, senior executives said in a post-earnings analysts call on Tuesday.
The company said bank credit continues to remain a more attractive funding avenue than bond markets for corporates, as elevated bond yields have encouraged borrowers to rely more on bank financing. Management said favourable liquidity conditions and the Reserve Bank of India's recent measures to encourage foreign currency inflows should continue to support funding conditions.
Tata Capital said the gap between loan disbursement growth and assets under management growth is expected to narrow over the next two to three quarters as higher disbursements increasingly translate into loan book expansion. During the June quarter, disbursements across key high-margin products rose 38% on year, while management expects faster growth in these segments to lift overall margins.
The company reiterated that retail and SME loans are expected to account for 80-85% of its overall loan book, with management indicating that corporate lending has largely reached its desired share and incremental growth will increasingly come from retail businesses, including housing finance and SME lending. While Tata Capital will continue to participate in attractive corporate lending opportunities, excess corporate originations could be syndicated to maintain the targeted portfolio mix.
Management also said efforts are underway to increase margins across all lending products, not just high-yield businesses. The company is seeking better pricing across housing, SME, retail and corporate loans while simultaneously increasing the share of higher-yield products in the portfolio.
On the liability side, Tata Capital expects its cost of funds to increase by around 8-10 basis points during 2026-27 (Apr-Mar), but said it is confident of offsetting this through improved pricing and a richer loan mix. Management expects net interest margins to improve by around 10 basis points during FY27 despite the increase in borrowing costs.
The company said bounce rates continue to improve month after month, reflecting healthy collection efficiencies and stable asset quality trends across its lending portfolio. Management added that any further improvement in credit costs would be an upside, as current return targets are primarily driven by margin expansion and operating leverage rather than lower provisioning.
On its planned entry into gold loans through the acquisition of Yogloans, Tata Capital said it has submitted its application to the Reserve Bank of India and is awaiting regulatory approval, which it expects by the end of the calendar year. Once approvals are received, the company plans to combine Yogloans' operations with its own planned organic gold loan business, adding around 500 branches over the next two-and-a-half to three years.
Management said the company remains well capitalised through the September quarter of FY29, with sufficient capital buffers to support its targeted growth trajectory while maintaining comfortable regulatory capital levels.
The company also outlined aggressive expansion plans for its affordable and micro housing businesses, with the affordable and micro housing loan portfolio expected to grow around 30% annually. Within this, the micro housing loan assets under management are expected to grow about 100% in FY27 and a further 50-60% in FY28, supported by strong demand in the segment.
The company released its June quarter earnings after market hours. Tuesday, shares of Tata Capital ended at INR 354.95 on the National Stock Exchange, up over 1% from Monday. End
Edited by Deepshikha Bhardwaj
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