Nuvama lifts Tata Capital target to ₹415 as Tata Motors Finance drag eases
Nuvama retained its HOLD call on Tata Capital while raising its target price from ₹400 to ₹415. The brokerage expects merger-related pressure from Tata Motors Finance to recede, supporting margin expansion, lower costs and a FY28 return on assets of 2.5–2.7%.
What happened
Nuvama raised Tata Capital’s target price to Rs 415, saying the Tata Motors Finance merger drag has largely passed. Management expects stronger margins,
Key facts
- Nuvama target price raised to Rs 415 from Rs 400
- HOLD rating retained
- Share price: Rs 370.60, up 1.90%
- Implied upside: 11.98%
- FY23 RoA: 2.5%; RoE: 20%
- Margin expansion target: ~25 bps over two years
- Cost-to-income target: 33-34% from 38-39%
- Credit-cost target: ~1%
- FY28 RoA target: 2.5-2.7%
- Q1 FY27 RoA: ~2.3%
- Third-largest private NBFC
Why this matters
The expected reduction in Tata Motors Finance integration pressure underscores the strategic value of consolidating financing platforms to unlock lower costs and stronger returns by FY28.
What to watch
- Sequential decline in Tata Motors Finance-related provisions and integration costs.
- Improvement in consolidated net interest margin and cost-to-income ratio.
- Stable or improving vehicle-finance collection efficiency, GNPA and NNPA ratios.
- Evidence of funding-cost compression or stronger share of lower-cost liabilities.
- Management confirmation of synergy timelines and FY28 RoA trajectory.
- Track quarterly disclosures for Tata Motors Finance portfolio mix, gross and net NPAs, credit costs and restructuring/integration expenses.
- Watch whether Tata Capital’s cost-to-income ratio declines as systems, branches and underwriting operations are consolidated.
- Monitor borrowing spreads and deposit/funding mix; lower funding costs would amplify merger-related margin expansion.
- Compare management’s medium-term RoA guidance with Nuvama’s FY28 2.5–2.7% expectation.
- Assess whether improved profitability prompts further target-price upgrades from other brokerages despite the current HOLD stance.