Tata Capital, the largest IPO of this year, announced the price band for its long awaited initial public offering, at Rs 310-326 per share for the Rs 15,512-crore issue.The pricing comes as a surprise, as it is less than half the stock’s last traded level in the unlisted market where it was trading at Rs 735 apiece.At the top end of the band, Tata Capital will be valued at about Rs 1.39 lakh crore ($15.7 billion), well below the earlier estimates of Rs 1.46 lakh crore ($16.5 billion). The issue, which opens on October 6 and closes on October 8, includes a fresh share sale of nearly Rs 6,846 crore and an offer-for-sale (OFS) worth Rs 8,665.87 crore, ET reported.This will be the country’s biggest IPO since Hyundai Motor India’s Rs 27,870-crore float last October. Other major listings this year have included HDB Financial Services (Rs 12,500 crore), Hexaware Technologies (Rs 8,750 crore) and NSDL (Rs 4,010 crore).Financial performanceTata Capital reported a profit after tax of Rs 3,655 crore in FY25, up from Rs 3,327 crore in the previous year. Revenues, too, surged to Rs 28,313 crore from Rs 18,175 crore, ET reported. Its peers show a mixed picture: HDB’s profit dropped 12% to Rs 2,176 crore, while Cholamandalam Investment posted a 25% rise to Rs 4,263 crore on revenues of Rs 25,890 crore. Bajaj Finance, with a market capitalisation of over Rs 6.16 lakh crore, delivered a 15% profit increase to Rs 16,638 crore and revenues of Rs 69,709 crore.Why Tata Capital is listed far below unlisted price?The sharp discount in the IPO price follows months of decline in Tata Capital’s unlisted stock. From a peak of Rs 1,125 in April 2025, it has tumbled nearly 70%. In June, it was still trading at Rs 1,075 before losing a third of its value amid sector weakness and the impact of a rights issue. The IPO band also undercuts that rights issue, which was priced at Rs 343.Analysts say this pattern is not unusual. “Investors buying stocks from the unlisted space often face inflated expectations due to lower liquidity and speculative premiums in unlisted markets,” said Raj Gaikar, research analyst at Samco Securities. “In the near term, recovering these losses fully may be difficult, as listed valuations tend to align more with sector averages than unlisted market multiples,” Gaikar told ET.A familiar storyHDB Financial Services’ IPO was priced 40% below its last unlisted level, while NSDL’s listing saw its grey market premium collapse by 35%. HDB’s offer price was Rs 740 per share, and the company now has a market cap of Rs 62,072 crore.Bankers argue that unlisted share prices are often misleading. “Unlisted share prices are often influenced by limited supply and investors’ desire to secure meaningful allocations for long-term holding,” said Nirav Shah, managing director of Equirus Capital. “While Tata Capital IPO is priced lower, market expectations are that the listed valuation will align with fundamentals over time and investors participating in the unlisted market usually need to take a very long-term view to justify the risks involved.”Yatin Singh, chief executive of investment banking at Emkay Global Financial Services, told ET, “Any price discovery in unlisted trades cannot and should not have any bearing on IPO pricing. Retail investors should refrain from hazarding a pricing guess in unlisted trades.”According to Shah, final IPO pricing depends on demand generated during roadshows and the book-building process, rather than chatter in grey or unlisted markets.
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