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Informist, Friday, Oct. 23, 2026

 

By Kabir Sharma

 

MUMBAI – Tata Capital Ltd. is expected to report a 52% year-on-year rise in consolidated net profit for the September quarter, supported by robust assets under management growth, steady margins, and improving operating efficiencies following the merger of its motor finance business. The lender's bottomline is seen at INR 16.64 billion for the reporting quarter, according to an average of estimates from six brokerages.

 

Net interest income is expected to rise 23.2% on year to INR 36.99 billion, according to the average of estimates. On a sequential basis, net interest income is seen increasing 3.6%, while net profit is expected to rise 7.5%. Among brokerages, Motilal Oswal Financial Services has the highest estimate for net profit at INR 17.13 billion, while Kotak Securities has the lowest estimate at INR 15.98 billion. JM Financial Institutional Securities has projected the highest net interest income at INR 37.72 billion, while Nomura Equity Research has the lowest estimate at INR 36.41 billion.

 

AUM GROWTH

Tata Capital's assets under management are expected to maintain strong growth momentum in the September quarter, supported by retail and small and medium enterprise lending franchises. Motilal Oswal Financial Services estimates consolidated assets under management growth of 24% on year and 4.2% sequentially. Kotak Securities expects assets under management to rise 24% on year and 3% sequentially, despite continued weakness in Tata Motors Finance Ltd. Excluding the motor finance business, assets under management growth is expected to remain strong at 28% on year. Nomura Equity Research expects sequential assets under management growth of 4%.

 

In the June quarter, Tata Capital's consolidated assets under management rose 22% on year to INR 2.91 trillion. Excluding the motor finance business, assets under management grew 28% on year to INR 2.66 trillion. Retail and SME loans accounted for 85.4% of the company's total portfolio.

 

MARGINS, CREDIT COSTS IN FOCUS

Brokerages expect margins to remain broadly stable, although estimates differ on the extent of pressure from funding costs and yields on loans. Motilal Oswal Financial Services expects margins to remain broadly stable sequentially around 5%, while Kotak Securities expects spreads to remain steady. Kotak Securities expects a marginal increase in the cost of funds to be offset by higher yields.

 

Nomura Equity Research, however, expects net interest margin to contract by 12 basis points sequentially, reflecting potential pressure on lending spreads. Credit costs are also expected to remain a key monitorable. Motilal Oswal Financial Services expects annualised credit costs to decline by 5 basis points sequentially to 0.90% from 0.95% in the June quarter.

 

Kotak Securities estimates credit costs at 0.95%, citing strong collection trends. Nomura Equity Research expects credit costs to increase marginally by 9 basis points sequentially. In the June quarter, annualised credit costs declined to 1.0% from 1.6% a year earlier, reflecting an improvement in asset quality. Gross stage 3 assets stood at 1.9% and net stage 3 assets at 0.8% as of June 30.

 

OPERATING EFFICIENCIES

Cost efficiencies arising from the merger of Tata Motors Finance with Tata Capital are expected to support operating performance. Kotak Securities expects the cost-to-average assets under management ratio to moderate to 2.2%, compared with 2.3-2.5% over the previous four quarters, as merger-related cost synergies take effect.

 

The brokerage expects these efficiencies to help contain operating costs even as the lender continues to expand its business. Tata Capital's management had said in the June quarter that investments in artificial intelligence and digital capabilities were improving productivity across loan origination, underwriting, collections and customer servicing. Assets under management had grown 22% on year, while headcount increased by only around 5%.

 

OUTLOOK

Tata Capital has guided for assets under management growth of 23-25% in 2027-28 (Apr-Mar) and expects net profit to grow more than 30% on year. For FY25-FY28, the company expects assets under management to grow at a compounded annual rate of 23-25%, while net profit is projected to grow at a compounded annual rate of more than 30%.

 

Investors are likely to focus on the management's commentary on loan growth, net interest margins, credit costs, and the realisation of merger-related synergies. The trajectory of funding costs and the performance of the motor finance business will also be important in assessing whether the company can sustain strong earnings growth while maintaining asset quality.

 

Of the six brokerage reports on the company available with Informist, four have a "buy" recommendation on the stock with an average target price of INR 391. This implies a 28% upside over the current market price. Two brokerages hava a "hold" recommendation with an average target price of INR 403.

 

Tata Capital will announce its financial results for the September quarter on Monday. Shares of the lender have fallen over 13% since its June quarter earnings were announced on Jul. 28. Friday, its shares ended 0.4% lower at INR 306.75 apiece on the National Stock Exchange.

 

Following are the Jul-Sept earnings estimates for Tata Capital from six brokerages in descending order by the net profit estimate, in INR billion:

 

Brokerage	Net interest income	Net profit
Motilal Oswal Financial Services Ltd	37.02	17.13
Nuvama Wealth Management Ltd	37.12	17.00
Emkay Global Financial Services Ltd	36.78	16.98
JM Financial Institutional Securities Pvt Ltd	37.72	16.39
Nomura Equity Research	36.41	16.37
Kotak Securities Ltd	36.87	15.98
Average	36.99	16.64

 

End

 

Edited by Akul Nishant Akhoury

 

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