Tata Capital Q2 Results: Profit jumps 51% to Rs 1,660 crore; NII up 23%

Tata Capital on Tuesday reported a 51% year-on-year (YoY) rise in consolidated net profit to Rs 1,660 crore for the September quarter, compared with Rs 1,097 crore in the corresponding period last year, supported by strong loan growth, higher interest income and lower credit costs.

The Tata Group's financial services arm reported a 24% increase in net total income to Rs 4,676 crore from Rs 3,774 crore a year earlier. Net interest income (NII) rose 23% to Rs 3,696 crore from Rs 3,006 crore.

On a sequential basis, net profit increased 7% from Rs 1,547 crore in the June quarter, while net total income grew 5% from Rs 4,455 crore. Net interest income rose 3.5% quarter-on-quarter.


The non-banking financial company's gross loan book crossed the Rs 3 lakh crore milestone during the quarter, rising 27% YoY to Rs 3,03,739 crore from Rs 2,39,960 crore. Assets under management (AUM) grew 26% to Rs 3,08,030 crore as of September 30, compared with Rs 2,43,896 crore a year earlier. Excluding motor finance, AUM increased 32% YoY.

"We achieved a significant milestone during the quarter, with our loan book crossing ₹3 trillion, underscoring the scale, diversification and resilience of our franchise," said Rajiv Sabharwal, Managing Director and CEO of Tata Capital.

He added that asset quality remained stable, supported by prudent underwriting and effective collections.

Tata Capital's pre-provisioning operating profit increased 33% YoY to Rs 3,025 crore from Rs 2,277 crore.

The company reported loan losses and provisions of Rs 645 crore, down 17% from Rs 773 crore in the year-ago quarter. Provisions also declined from Rs 676 crore in the preceding quarter. The reduction in provisions helped profit before tax jump 58% to Rs 2,380 crore from Rs 1,504 crore.

Operating expenses increased 10% to Rs 1,651 crore, considerably slower than the growth in income. Consequently, the company's cost-to-income ratio improved to 35.3% from 39.7% a year earlier, reflecting better operating efficiency. Annualised credit cost declined to 0.9% from 1.3% in the corresponding quarter last year.

Fee income rose 9% to Rs 725 crore from Rs 663 crore, while investment income surged to Rs 255 crore from Rs 105 crore.

Asset quality

Tata Capital reported a gross stage 3 (GS3) ratio of 1.9% and a net stage 3 (NS3) ratio of 0.8% as of September 30. Its provision coverage ratio stood at 58.6%.

Annualised return on assets improved to 2.3% from 1.9% a year earlier, while return on equity increased to 14% from 13%. Excluding motor finance, the company's annualised return on assets stood at 2.5%, compared with 2.2% in the year-ago quarter.

Tata Capital's capital adequacy ratio stood at 17.3%, while total equity reached Rs 47,778 crore at the end of September.

Retail and SME lending accounted for 85.4% of the company's net AUM, with high-margin retail loans contributing around 25%.

Disclosure: This article has been written by Podishetti Akash, who is not a SEBI-registered Research Analyst or an Investment Adviser. Podishetti Akash and his ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclosures here.