Tata Capital Q2 net profit rises 51% on higher income

Tata Capital posted 51% profit growth in Q2 FY27 as assets under management reached Rs 3.08 lakh crore, with floating-rate loan hikes planned.

The non-bank lender’s assets under management rose 26% to Rs 3.08 lakh crore as of September 30. Its retail portfolio, which includes home loans, loans against property, two-wheeler loans, personal loans and business loans, stood at Rs 1.51 lakh crore, while loans to small businesses stood at Rs 88,500 crore. Its corporate loan book stood at Rs 44,862 crore, while motor finance loans totalled Rs 23,591 crore. Unsecured loans accounted for 10% of net AUM.

Rajiv Sabharwal, MD & CEO, said the company’s exposure to revolving credit or flexi loans was about 3-4% of AUM. “We are evaluating alternative products to mitigate any impact of the curbs on revolving credit,” he told reporters. The RBI has proposed that NBFCs discontinue the provision of revolving credit to customers.

Tata Capital will raise interest rates on its floating-rate loans by 20-25 basis points with effect from November 1 in response to the repo rate increase, which could push up the finance company’s borrowing costs, he said.

Speaking to analysts, Sabharwal said NIMs moderated in Q2 but should improve in Q3 and Q4. “As of now, 48% of our liabilities are on a floating-rate basis, while 66% of our assets are on a floating-rate basis. So, we are very well positioned,” he said. Sabharwal added that the NBFC would not pursue growth at the expense of margins.

On fundraising plans, Sabharwal said: “We expect to raise capital in the second half of FY28, depending on how the credit book grows.”

Net interest income increased 23% to Rs 3,696 crore, while investment income more than doubled to Rs 255 crore from Rs 105 crore. Fee income grew 9% to Rs 725 crore.

Gross stage-three assets stood at 1.9% and net stage-three assets at 0.8% as of September 30. The provision coverage ratio was 58.6%, while the capital adequacy ratio stood at 17.3% and the Tier 1 ratio at 14.7%.

For the first half of FY27, net profit grew 54% to Rs 3,207 crore from Rs 2,087 crore, while net total income increased 23% to Rs 9,132 crore.