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HomeNewsBusinessTest2 - Tata Capital IPO: Margins under pressure as funding costs rise and provisioning buffers thin

Test2 - Tata Capital IPO: Margins under pressure as funding costs rise and provisioning buffers thin

Credit-risk concentration still high; funding costs compressing NIMs

naved author
October 07, 2025 / 13:58 IST
10

TMFL merger weighs down on Tata Capital’s profitability; provisioning cushion shrinks

The integration of Tata Motors Finance Ltd (TMFL) has added scale and wider vehicle financing to Tata Capital’s portfolio; but it has also introduced higher-cost liabilities and moderate-quality assets, requiring larger provisions and pushing up the blended cost of funds.

Tata Capital’s return on equity and return on assets dipped through FY25 and 1QFY26 because of losses from the recently merged Tata Motors Finance Ltd (TMFL), said SBI Securities. The brokerage expects this to reverse once TMFL turns profitable.

At a glance: Tata Capital FY25 snapshot

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