Tata Capital, the non-banking financial arm of the Tata Group, has unveiled an ambitious strategic roadmap for the fiscal year 2027, projecting a significant 23-25% growth in its assets under management (AUMs). The company plans to aggressively expand its presence in affordable housing and gold loan segments, alongside a renewed focus on unsecured retail lending.
Aggressive Housing Sector Expansion
A primary growth driver for Tata Capital will be its housing finance business. The company anticipates its affordable housing portfolio to expand by approximately 30% in FY27. Even more notably, the micro-housing segment is projected to double its growth during the same fiscal year, building on a smaller base, with an additional 50-60% growth expected in FY28. Management attributes this expansion to the sustained demand for affordable homes across the market.
Major Push into Gold Loans
In a significant strategic move, Tata Capital is making a substantial entry into the gold loan market. The company has proposed acquiring an 88.6% stake in Yogi Loans, a transaction pending approvals from the Reserve Bank of India (RBI) and other regulatory bodies, which it expects to finalize by the end of calendar year 2026.
Following this acquisition, Tata Capital plans to establish approximately 500 new gold loan branches over the next 2.5 to 3 years. This expansion aims to boost the gold loan business to over Rs 4,000 crore in assets, leveraging the Tata brand's credibility, competitive funding costs, and advanced technology platforms.
Retail Lending and Profitability Outlook
Retail and SME lending are expected to remain the core engines of growth, contributing 85-88% of Tata Capital's total loan book. The share of corporate lending is set to gradually decrease as the portfolio shifts towards higher-yielding retail businesses. Unsecured retail lending is anticipated to regain momentum after a cautious period, with loan growth accelerating by the third or fourth quarter of FY27 as new disbursements translate into increased outstanding loans.
Tata Capital forecasts an improvement in net interest margins (NIMs) by around 10 basis points in FY27. This positive outlook is driven by a favorable mix of high-yielding products and optimized pricing strategies. Despite an expected slight rise in the cost of funds, the company believes its portfolio adjustments and pricing will effectively offset this impact. Credit costs are projected to stay below 1%, and operating expenses as a percentage of assets are expected to decline, contributing to enhanced returns on assets.
Technology and Digital Transformation
Technology continues to be a critical focus area for Tata Capital. The company reports that nearly 98% of its customers are now onboarded digitally. Furthermore, approximately 70% of retail loan applications are processed through AI-enabled workflows, leading to faster turnaround times and significant productivity gains. Artificial intelligence is also being increasingly utilized in customer service, collections, and marketing efforts.
Overall, Tata Capital remains confident that its combined strategy of accelerated retail growth, expanding margins, robust asset quality, and strategic expansion into housing and gold loans will ensure sustained healthy earnings growth and maintain a strong capital base for future initiatives.