29 Jul , 2026 By : Debdeep Gupta
Nomura maintained its Buy rating on Tata Capital and raised its target price to Rs 415 from Rs 400 after the company's Q1FY27 results, saying asset quality remains "well in control."
The brokerage said Tata Capital's Q1 net profit of Rs 16.2 billion rose 56% year-on-year and "beat our (and consensus) estimates by 10-11%." The company reported return on assets (ROA) of 2.3% and return on equity (ROE) of 13.7% for the quarter.
Nomura said, "As highlighted in our recent report... management has guided for margin expansion from 2Q27E. Thus, we believe 1QFY27's NIM decline of 14 basis points quarter-on-quarter is in line with guidance." It added, "credit cost beat of 12% (vs our estimate) is encouraging."
On asset quality, the brokerage said, "Credit cost at 1% (annualized) in 1QFY27 was pretty healthy and was supported by gross stage 2 3 (%) reduction of 10 basis points quarter-on-quarter." It added that "overall provision coverage ratio registered a slight reduction of 5 basis points quarter-on-quarter."
Nomura also highlighted improvement in key portfolios, saying "Tata Capital's personal/business loan segment's gross stage 3 (%) declined to 5.4% vs the peak of 5.7%-5.8% in FY26," while "motor finance gross stage 3 (%) is now below 8%."
The brokerage said "the high-margin product segments (personal loans, business loans, MFI, motor loans, affordable mortgage) recorded 38% year-on-year disbursal growth in 1QFY27 but 10% AUM growth." It also noted that "the motor finance book declined another 4% quarter-on-quarter in 1QFY27," although "the slowdown in the book has been coming off."
Nomura said management "sees 10 basis points of NIM expansion in FY27F year-on-year" and described FY27 as "a critical year for Tata Capital management to prove its ability to turn around the company's profitability profile."
As it rolled forward its valuation to June 2027, Nomura raised its target price to Rs 415 from Rs 400 and reiterated its Buy rating.
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