Tata Capital shares rally over 5% as brokerages give ‘Buy’ call after strong Q2 results; check target prices

The Tata group stock opened at Rs 308.60 on the BSE and climbed 6.1 percent to hit the day’s high of Rs 328.50, compared with the last closing price of Rs 309.35. The stock eventually settled 5.54 per cent or Rs 17.15 higher at Rs 326.50. The company announced its Q2 FY27 results on Tuesday, reporting strong growth in profitability and assets under management (AUM). Tata Capital Q2 results Tata Capital reported a 51 percent year-on-year (YoY) growth in consolidated net profit to Rs 1,660 crore for the September quarter of FY27.

The company had posted a net profit of Rs 1,097 crore in the July-September period of FY26. Net total income rose 24 per cent to Rs 4,676 crore during the September quarter of FY27, from Rs 3,774 crore in the corresponding period a year ago. The non-bank lender’s Assets Under Management (AUM) stood at Rs 3,08,030 crore, up 26 per cent year-on-year. In a separate exchange filing, Tata Capital said its board approved a proposal for the enhancement of the existing medium-term note programme from USD 2 billion to USD 3 billion and, subject to market conditions, issuance of foreign currency bonds/debt instruments under the MTN Programme, in one or more tranches, by way of external commercial borrowings.

Brokerages on Tata Capital: Check share price targets JM Financial on Tata Capital share: Buy, target price Rs 400 Brokerage firm JM Financial maintained its ‘Buy’ rating on Tata Capital with a target price of Rs 400, citing good quarter with strong profit growth, healthy AUM expansion and improving operating leverage. The brokerage said the company's profit after tax rose 64 percent YoY and 13 percent quarter-on-quarter, exceeding its estimates by 12 percent.

Return on assets (RoA) and return on equity (RoE) improved to 2.4 percent and 14.8 percent, respectively. However, the brokerage flagged that net interest margin (NIM) remained a key concern. Calculated NIM declined 9 basis points sequentially to around 4.9 percent, marking the fourth consecutive quarterly decline. The contraction was driven by a 13-basis-point increase in the calculated cost of funds, partly reflecting the impact of EBLR- and repo-linked bank borrowings.

Consequently, net interest income grew 23 per cent YoY and 4 per cent quarter-on-quarter, below the brokerage's estimates, despite AUM growth of 26 per cent YoY and 6 per cent sequentially. “As a result, net interest income (NII) grew only 23%/4% YoY/QoQ (-2% JMFe) despite strong AUM growth of 26%/6% (32% YoY ex-Motor Finance). Higher other income (due to gain from the PE business) and lower opex offset the NII miss and weak core fees, so PPOP was slightly ahead of our estimates,” the brokerage said.

JM Financial noted that credit costs remained contained at 0.86 per cent, while management retained its existing guidance. “The levers available are 20-25bps PLR hikes from November 2026, a largely floating loan book (66% versus 49% of borrowings) and a rising mix of high-yield retail,” it added. JM Financial values Tata Capital at 2.8 times its estimated FY28 book value per share, based on average RoA of 2.2 per cent and RoE of 16 per cent over FY27-FY29.

Systematix Institutional Equities on Tata Capital share: Buy, target price Rs 400 Systematix Institutional Equities also maintained its ‘Buy’ outlook on Tata Capital, with a target price of Rs 400, valuing the stock at 2.7x estimated FY28 adjusted book value. The brokerage said the company's Q2 FY27 profit of around Rs 1,830 crore was approximately 11 percent above its estimates and 13 percent ahead of Bloomberg consensus expectations.

Improving operating leverage and lower-than-expected credit costs supported the performance. The cost-to-income ratio improved by 100 basis points sequentially, while credit costs declined 10 basis points to 0.86 per cent. AUM growth was led by the corporate and small and medium enterprise (SME) segments, which expanded 54 per cent and 34 per cent YoY, respectively. Retail AUM grew 17 per cent despite the continued run-off in motor finance.

“Excluding motor finance, retail growth remained healthy, with high-margin product disbursements rising 40% YoY and the mix increasing 400bps YoY to 14%. Calculated NIM declined 7bps QoQ to ~4.9%, driven by higher CoF and competitive pressure on housing finance yields,” it added. Asset quality remained stable, with gross non-performing assets (GNPA) at 1.9 per cent. Stage 2 assets improved by 10 basis points sequentially to 1.2 per cent.

Systematix said management had reiterated its FY28 guidance of 23-25 per cent AUM growth, RoA of 2.5-2.7 per cent and credit costs below 1 per cent. Management also indicated the possibility of exceeding its AUM growth guidance, with a potential upward revision in the second half of FY27. The brokerage retained its estimates, which remain 5 per cent above Bloomberg consensus for FY27 and FY28, citing confidence in execution, gradual margin improvement and stable asset quality.

Nuvama on Tata Capital share: Buy, target price Rs 400 Nuvama retained its ‘Buy’ rating on Tata Capital but revised the target price to Rs 400 from Rs 415 earlier. The brokerage highlighted the company's 26 percent YoY and 6 percent sequential AUM growth, alongside an 8 percent profit beat on its adjusted reporting basis, supported by stronger fee income and lower provisions. Despite a 9bp QoQ NIM decline to 4.9 percent on higher CoF, Nuvama expects improved loan yields should stabilise margins in Q3 FY27.

“Going ahead, better margins/operating leverage and sub-1% credit costs with no meaningful stress seen, should drive further RoA improvement.” Nuvama believes Tata Capital is entering a phase of stronger growth alongside improving profitability, projecting RoA of 2.3-2.5 per cent and RoE of 15-18 per cent over FY27-FY29. The brokerage's revised target price of Rs 400 implies a valuation of 2.4 times estimated September 2028 adjusted book value and 16 times earnings per share.