Citigroup Initiates Tata Capital With Buy Rating, Sees 32% Upside

Citigroup has launched coverage of Tata Capital with a 'Buy' rating, signalling confidence in the non-banking financial company's growth trajectory. The initiation reflects the brokerage's view that the NBFC is well-positioned to capitalize on expanding opportunities in India's financial services sector.

The 32% upside projection is underpinned by several key catalysts. Citigroup expects Tata Capital to achieve robust asset under management (AUM) growth while simultaneously improving its revenue mix through increased exposure to higher-yielding retail and small and medium enterprise segments. The shift towards more profitable business lines should support margin expansion going forward.

Operational leverage represents another significant growth driver identified by the brokerage. As Tata Capital scales its operations, fixed costs are expected to be absorbed across a larger revenue base, creating efficiency gains. Additionally, Citigroup anticipates a meaningful recovery in the Motor Finance segment, which has faced headwinds in recent years but is expected to normalize as vehicle purchase demand stabilizes.

Collectively, these factors are expected to drive profitability growth through the fiscal year 2029 period, supporting the brokerage's constructive stance on the stock. The initiation adds to growing market recognition of Tata Capital's potential as a beneficiary of India's expanding credit demand and financial inclusion trends.