Tata Capital posts strong Q3 as net profit leaps 39 percent on robust lending and steady asset quality

• What happened: Tata Capital reported Q3 net profit of ₹1,285 crore, up 39 percent year-on-year, with net interest income up 26 percent.

• Why it matters now: The results highlight strong credit growth and stable asset quality in a high-rate environment.

• What changes for people: Lending momentum in retail and SME segments suggests better credit availability and steady borrowing costs.

• Who is affected: Investors, borrowers, lenders, and sectors linked to NBFC funding, including SMEs and housing finance.

Tata Capital, the non-banking financial arm of the Tata Group, reported a sharp rise in profits for the quarter ended December 2025, supported by strong loan demand and disciplined risk controls. The company posted a consolidated net profit of ₹1,285 crore, a 39 percent increase over the same quarter last year, excluding its motor finance business.

The performance keeps the company aligned with its growth guidance and signals resilient credit appetite in India’s broader financial ecosystem.

Growth driven by retail and SME lending

During the quarter, net interest income climbed 26 percent to ₹2,936 crore, reflecting loan book expansion and stable margins. The company’s assets under management (AUM) stood at ₹2,34,114 crore, also up 26 percent year-on-year.

The SME segment formed the largest slice of the loan book at ₹70,549 crore, while the retail portfolio, including housing and personal financing, accounted for 60 percent of total AUM.

Asset quality remains steady

Asset quality indicators held firm, which is critical for lenders amid elevated borrowing costs.
Key indicators reported:

• Annualised credit cost: 1 percent, improving from 1.1 percent in the previous quarter

• Gross NPA: 1.6 percent

• Net NPA: 0.6 percent

These levels were unchanged from September 2025, indicating a steady loan book despite high growth.

Operating performance and provisions

Pre-provision operating profit rose 42 percent year-on-year to ₹2,311 crore, supported by scale benefits and efficiency push. Provisions also increased 42 percent to ₹581 crore, reflecting cautious buffer creation amid macro uncertainty.

Management commentary signals confidence

Managing Director and CEO Rajiv Sabharwal said the company saw broad-based growth across products, with PAT up 39 percent and AUM up 26 percent year-on-year.

He emphasised that credit quality remained robust, with early indicators showing stability across segments. He also noted that earlier curbs on unsecured retail lending were being eased as slippages reduced, while digital and GenAI investments helped drive operating efficiency.

Market performance since listing

Tata Capital listed on Indian exchanges on October 13, opening at ₹334 per share, a 1.2 percent premium to its issue price of ₹330. After a muted first month, the stock picked up momentum in mid-December.

At present levels, shares are trading around 10.5 percent above listing price, reflecting growing investor confidence after its first quarterly report as a listed entity.

Why it matters for markets and borrowers

The results underline:

• NBFC sector health: Stable NPAs and credit cost improvement

• Loan demand strength: High retail and SME share in disbursals

• Investor confidence: Stock holding gains since listing

For borrowers, steady asset quality and expanding AUM indicate continued loan access, especially in housing, personal, and SME financing.

What to watch next:
Lenders and analysts will monitor credit costs, unsecured loan trends, and interest rate impact over the coming quarters, as well as how digital lending initiatives shape growth and efficiency for the company.