Tata Capital IPO: Reality Check on Hype and Grey Market Premiums
Tata Capital's Initial Public Offering (IPO) has hit the stock market today, offering a stark reality check on the dynamics of hype, grey market premiums, and investor sentiment in India's IPO landscape. The IPO, priced at ₹310-326 per share, is a significant departure from its recent rights issue price and unlisted market valuation.
The IPO band represents a nearly 70 percent drop from Tata Capital's peak grey market price of ₹1,125 per share in April 2025. This correction comes despite the company boasting a strong brand, diversified portfolio, and robust financials with a P/E multiple of 113x and return on equity of 12 percent.
Retail investors who purchased Tata Capital's unlisted shares at high grey market prices are now facing substantial losses, with shares falling by 32 percent between April and September 2025. However, new IPO applicants may find the lower entry point appealing. The IPO, with a fresh issue of ₹6,846 crore and an offer for sale of ₹8,665.87 crore, is expected to have an estimated market capitalization of about ₹1.38 lakh crore.
The IPO market in India has evolved, with valuation discipline gaining prominence. Between 2023 and 2025, nearly 30 percent of IPOs have listed below their issue price, indicating a maturing market where retail investors are learning to navigate the unreliability of grey market premiums.
Tata Capital's IPO, priced below its recent rights issue price and unlisted market valuation, serves as a reminder of the volatile nature of India's IPO market. While retail investors may face losses, the IPO also presents an opportunity for new investors to enter at a lower price point. As the market continues to mature, valuation discipline and investor education will play increasingly crucial roles.
