Tata Capital IPO: From Sky-High Grey Market Buzz to a Reality Check on Valuations

In India’s bustling IPO market, Tata Capital’s long-awaited public debut is shaping up to be more than just a fundraising exercise—it is a reality check on how hype, grey market premiums, and investor sentiment collide.

The company has fixed the price band of its initial public offering (IPO) at ₹310–326 per share, a level that has surprised many. The reason? It is below its recent rights issue price of ₹343 and nearly 55 percent lower than its prevailing unlisted market price of around ₹735.

For retail investors who were lured into the unlisted market at sky-high levels, this has come as a bitter blow.

Tata Capital IPO: From Grey Market Highs to Sharp Erosion

Not too long ago, Tata Capital’s unlisted stock was one of the most coveted names in the grey market. In April 2025, it touched a peak of ₹1,125 per share. By early June, it was still fetching ₹1,075. Fast forward to late September, and the stock has slipped by 32 percent amid a cocktail of market volatility, a rights issue in July, and weakness across the financial sector.

The IPO band now implies a nearly 70 percent erosion from those heady grey market levels.

This pattern is not new. Just a few months ago, HDB Financial Services witnessed a similar story—its unlisted shares fell 40 percent before the IPO, which listed at only a 5 percent premium. Retail investors, locked in by SEBI’s six-month pre-IPO rules, had no option but to sit on paper losses.

Another reminder came from the National Securities Depository Ltd (NSDL) IPO earlier this year. Despite strong pre-listing enthusiasm, it saw a stunning 35 percent plunge on listing day, leaving many retail investors shaken.

Between 2023 and 2025, nearly 30 percent of IPOs in India have listed below issue price—a sobering statistic for those relying solely on grey market signals.

Valuations: Where Hype Meets Reality

One of the reasons for the sharp markdown in Tata Capital’s unlisted shares lies in its valuations. At their peak, these shares were trading at 8.5–11 times price-to-book value, much higher than sector leaders:

• Bajaj Finance at 5.9x,

• Shriram Finance at 4x.

“The hype around the Tata brand, stoked by a network of brokers, inflated prices to unsustainable levels. Brokers booked gains, but clients are left holding losses,” said a market expert.

Now, as the company comes to the public market with a P/E multiple of 113x and a modest 12 percent return on equity, analysts are cautious. While Tata Capital’s strong brand and diversified portfolio—₹2.37 lakh crore AUM, 88 percent in retail and SME loans, and a CAGR of 28–37 percent—show long-term resilience, the near-term upside looks limited compared to peers.

Pain for Old Investors, Opportunity for New Ones?

For investors who bought in the grey market at higher levels, the IPO feels like a painful markdown. But for fresh IPO applicants, the lower entry point may actually be an advantage.

“The reset in valuation could work in favor of new investors, especially those who see Tata Capital as a long-term compounding story. But grey market players should take this as a lesson—hype and brand name alone don’t justify any price,” said another analyst.

The Numbers Behind the IPO

At the upper price band of ₹326 per share:

• Fresh issue: ₹6,846 crore

• Offer for sale (OFS): ₹8,665.87 crore

• Anchor book size: around ₹4,642 crore

• Estimated market capitalization: about ₹1.38 lakh crore

Tata Capital’s IPO is more than just another big-ticket listing. It highlights how India’s IPO market has matured, where valuation discipline is becoming increasingly important, and where retail investors are learning—sometimes the hard way—that the grey market is not always a reliable guide.

For Tata Capital, the IPO will be a landmark in its growth story. But for the broader market, it will serve as a case study in how brand power, investor frenzy, and valuation reality often collide.