Tata Capital IPO Grey Market Premium Drops to 3%
Tata Capital’s IPO opened for subscription on Monday, October 6, 2025. It is one of the biggest IPOs of the year, valued at ₹15,512 crore. The IPO includes a fresh issue of ₹6,846 crore and an offer for sale (OFS) of ₹8,666 crore by Tata Sons and IFC. The price band is set between ₹310 and ₹326 per share. Despite strong interest from investors and brokerages, the Grey Market Premium (GMP) has dropped to just ₹12.5, which is about 3.8% over the upper price band
What Is GMP and Why It Matters
GMP stands for Grey Market Premium. It shows how much investors are willing to pay for the shares before they are officially listed. A high GMP usually means strong demand and expected listing gains. But in Tata Capital’s case, the GMP has fallen sharply. Last week, it was around ₹31. Now, it is just ₹12.5.
This drop has surprised many investors. Even though 15 brokerages have given a “subscribe” rating, the GMP is not rising. Experts say this shows caution in the market. Investors are not expecting big profits on listing day.
Reasons Behind Low GMP
There are three main reasons for the low GMP:
- Fair Valuation: At the upper price of ₹326, Tata Capital is valued at 4.2 to 4.3 times its post-issue book value. This is similar to other NBFCs like Bajaj Finance and HDB Financial. Analysts say the IPO is fairly priced, leaving little room for short-term gains .
- Merger Impact: Tata Capital recently merged with Tata Motor Finance Ltd. This has increased its gross non-performing assets (NPA) from 0.5% to 1%. It also reduced its return on equity (ROE) from 14.2% in FY24 to 12.6% in FY25 .
- Crowded IPO Market: Many big IPOs are happening at the same time. LG Electronics is also launching its IPO. This has stretched investor funds and reduced speculative activity in the grey market.
Subscription Status
As of October 7, 2025, the IPO has been subscribed by 48%. Qualified Institutional Buyers (QIBs) have subscribed 52% of their portion. Retail Individual Investors (RIIs) have subscribed 49%. Non-Institutional Investors (NIIs) have subscribed 41%. The employee portion is fully booked at 147%, showing strong internal confidence
Listing Date and Allotment
The IPO will close on Wednesday, October 8. Allotment is expected on Thursday, October 9. Tata Capital shares will list on Monday, October 13 on both BSE and NSE.
Should You Invest?
Many experts still recommend investing in Tata Capital for the long term. The company has strong fundamentals, a trusted brand, and a wide business portfolio. It is active in retail loans, SME finance, and digital lending. However, short-term gains may be limited due to fair pricing and market conditions .
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