Tata Capital (TATACAP)

FairStock Score: 55/100 — STEADY

Score breakdown: P/E: 0/3 · ROCE: 0/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

Strengths

• Tata brand and 85.41% promoter holding align incentives and build trust in a financial services business.
• Profit growth of 19.81% is outpacing sales growth of 12.27%, indicating operating leverage and cost discipline.
• Latest quarter net profit of ₹1,265 Cr on sales of ₹7,975 Cr implies a strong net margin near 16%.
• Piotroski F-Score of 7/9 points to sound financial health on the fundamentals given.
• Reported Debt/Equity of 0.00 suggests a conservative balance sheet, if accurately stated.

Concerns

• Valuation is rich: P/E of 31.98 and P/B of 3.97 against ROE of only 12.01% leaves little margin of safety.
• PEG of 1.99 suggests the market is already pricing in a long runway of growth.
• Free cash flow is deeply negative at -₹26,705 Cr, which needs careful scrutiny even for a loan grower.
• Zero dividend yield means investors get no income support and are entirely dependent on capital appreciation.

AI Analysis

Putting Tata Capital on my mental workbench, I start not with price but with business quality. This is an NBFC carrying the Tata name, and 85.41% promoter holding tells me the Tatas have their own wealth locked alongside mine. Trust and brand can be a moat in Indian lending. The latest quarter is genuinely fine: ₹7,975 crore of sales, ₹1,265 crore net profit, a margin near 16%. Profit grew 19.81% on sales growth of 12.27%, which shows good cost control and operating leverage. The Piotroski score at 7/9 supports a sound financial skeleton, and the reported debt/equity at 0.00 would make any Graham smile—though as an NBFC, I need to pinch myself to believe it. A lender with no debt must be funding itself through equity or borrowing instruments that do not show in this ratio; I would want the full borrowings schedule before trusting that number. Now the hard part: price. At ₹340.60, the company earns roughly ₹10.65 per share and carries book value of ₹85.70. So I am paying 32 times earnings and 3.97 times book for a 12% return on equity. If the 19.81% growth continues, the business may justify a premium, but PEG at 1.99 creates no margin of safety. Free cash flow is massively negative at -₹26,705 crore, often a feature of a growing loan book, but it is still cash that must be financed. With zero dividend yield, all my reward depends on future growth and the multiple staying high. This is a high-quality lender, but at this price, I would need a steeper discount to call it a Buffett bargain.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer