Motilal Oswal initiates coverage on Tata Capital, gives target price and re-rating triggers

Motilal Oswal initiated coverage on Tata Capital, expecting AUM to grow at a CAGR of 23% over FY26-28E with total AUM currently at Rs 2.77 trillion as of March 2026. The brokerage noted NIMs are expected to improve to nearly 5.4%/5.5% in FY27E/FY28E from about 5.2% in FY26, supported by a shift toward retail and unsecured lending, while credit costs are likely to normalize to about 1.1% of AUM. While the medium-term outlook is favourable, Motilal Oswal believes current valuations adequately reflect the growth potential, making sustained improvement in RoA and RoE the key re-rating triggers.