Tata Capital Ltd. remains on JPMorgan's good side as the brokerage maintained its 'overweight' rating for the stock on the back of net interest margin (NIM) growth.
JPMorgan has set Rs 395 as the price target for the counter, implying an upside of 12.54% from the current market price of Rs 351.95.
The brokerage noted that NIM remains a key driver of Return on Assets (RoA) ramp-up, with management aiming for margin expansion in the second half of fiscal 2027.
Further, JPMorgan highlighted, "Asset quality and early delinquency trends remain benign, though monitoring certain segments in SME closely, which are more exposed to macro and crude prices."
Growth guidance for the Tata company remains intact, with an estimate of 23-25% and the company aiming to deliver at the upper end, supported by retail/SME/corporate demand and diversification levers.
The impact of Foreign Currency Non-Resident (FCNR) rate revisions has been nuanced, according to the brokerage, as TCAP saw limited pass-through benefits, primarily in short-duration (30-60 day) money, with 3-year funding costs continuing to rise.
"There was a lot of discussion on the potential impact of any regulatory restrictions on the Flexi-product, where TCAP put the net exposure below 5% of the loan book and is hopeful of relaxation vs. the draft circular, given the clarifications submitted as well as a genuine customer need," JPMorgan underlined.
It added that for a re-rating of Tata Capital, there should be visible NIM inflection, credit costs should trend below 1%, and growth should accelerate.
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