Tata Capital reported a strong performance for the July-September quarter of financial year 2026-27, with consolidated net profit rising 51% year-on-year to ₹1,660 crore. The non-banking financial company (NBFC) benefited from higher interest income, expansion in its lending business and improving profitability. Its loan book crossed the ₹3 lakh crore mark, reflecting continued demand across retail, small business and corporate lending.
The company had reported a consolidated net profit of ₹1,097 crore in the corresponding quarter of the previous financial year. Net interest income (NII), which represents the difference between interest earned on loans and interest paid on borrowings, increased 23% year-on-year, highlighting the momentum in its core lending operations.
Net total income rose 24% to ₹4,676 crore in the second quarter, compared with ₹3,774 crore a year earlier. The results underline the company’s ability to expand its lending business while improving earnings. Investors are now watching whether Tata Capital can sustain this performance as competition, funding costs and changing borrower demand influence the financial services sector.
The company’s assets under management (AUM) increased 26% year-on-year to ₹3,08,030 crore as of September 30, compared with ₹2,43,896 crore a year earlier. AUM also grew 6% sequentially from the June quarter. Excluding motor finance, growth stood at 32%, indicating expansion across other lending segments.
Tata Capital’s gross loan book expanded 27% year-on-year to ₹3,03,739 crore from ₹2,39,960 crore in the corresponding period last year. Crossing the ₹3 lakh crore milestone represents a significant step for the lender as it strengthens its presence across several customer categories.
Managing Director and Chief Executive Officer Rajiv Sabhawal said the milestone reflected the scale, diversification and resilience of the company’s business. He also highlighted stable asset quality, supported by prudent underwriting practices and effective collection mechanisms.
Tata Capital remains confident of meeting its financial targets for FY28 across business growth, cost-to-income ratio, credit costs, return on assets (RoA) and return on equity (RoE). The company has reiterated its medium-term AUM growth guidance of 23-25%.
Its growth strategy focuses on expanding lending across customer segments while maintaining control over credit risk and operating expenses. Retail and small and medium enterprise (SME) lending remain important parts of its portfolio, helping diversify exposure across borrowers and industries.
The lender is also seeking to improve operating efficiency as its business expands. Higher disbursements in profitable lending segments could support earnings, while better cost management may improve profitability over time.
However, rising funding costs remain a potential challenge for NBFCs. Higher borrowing expenses can put pressure on lending margins unless companies adjust loan pricing, manage their asset-liability mix and increase the contribution of higher-margin products.
Brokerages have offered differing views on Tata Capital’s valuation and future performance following its quarterly results.
Nuvama retained its ‘Buy’ rating but reduced its share price target to ₹400 from ₹415. The brokerage expects profitability to improve as lending margins recover, operating leverage strengthens and credit costs remain under control.
Motilal Oswal maintained a ‘Neutral’ rating with a target price of ₹340. It expects AUM growth to remain strong and sees scope for improving returns as the company expands its lending operations.
Systematix retained its earnings estimates for FY27 and FY28, with its forecasts remaining above broader market consensus estimates. The brokerage highlighted execution, margin improvement and asset quality as important factors supporting its outlook.
The assessments suggest that Tata Capital’s growth prospects remain closely linked to its ability to maintain lending momentum and improve profitability. However, differences in target prices reflect uncertainty over future earnings, funding expenses and valuation levels. Investors should also distinguish between brokerage expectations and actual future performance.
Investors will closely monitor asset quality as Tata Capital expands its loan book. Faster lending can support revenue and profits, but maintaining repayment discipline is essential to prevent credit losses from increasing.
The company has emphasised prudent underwriting and collection practices to protect portfolio quality. Its ability to maintain stable bad-loan levels while expanding lending will remain an important indicator of performance.
Net interest margins will also be watched closely. Changes in borrowing costs, loan pricing and the mix of lending products could influence earnings growth in the coming quarters.
Tata Capital’s second-quarter results demonstrate strong business expansion and improved profitability. Nevertheless, sustaining this momentum will depend on disciplined lending, effective cost management and the company’s ability to deliver its medium-term targets.