For Tata Capital, narrowing profitability gap with Bajaj Finance is a tough task

Tata Capital stock hit an all-time high of Rs 380 on Friday, extending post-listing gains from its issue price of Rs 330, triggered by management reiterating its growth roadmap through FY28. A detailed comparison with Bajaj Finance reveals a significant profitability gap, with Bajaj Finance posting a 3.8% return on assets in FY26 versus 1.8% for Tata Capital, supported by a higher asset yield of 15.7% compared with 10.8% for Tata Capital. Analysts suggest limited scope for relative valuation re-rating, as Tata Capital already trades at about 17x FY28 EPS versus 20x for Bajaj Finance, broadly matching the typical 10-15% premium for industry leaders, while a stake sale of nearly 11 percentage points by the Tata group to meet Sebi MPS norms by October 2028 could cap upside.