Key Financial Performance Metrics (Consolidated)

AUM Growth

  • Consolidated AUM crossed ₹3 lakh crore milestone, standing at ₹3,08,030 crores as of September 30, 2026
  • 26% year-on-year growth and 6% sequential growth
  • Excluding Motor Finance business: 32% YoY growth and 7% QoQ growth

Profitability

  • Profit After Tax (PAT): ₹1,660 crores for Q2 FY27
  • 51% year-on-year growth and 7% sequential growth
  • Return on Assets (ROA): 2.3% (2.5% excluding Motor Finance)
  • Return on Equity (ROE): Crossed 14%

Asset Quality

  • Gross Stage 3 assets: Stable at 1.9%
  • Provision coverage ratio: Improved to 59%
  • Annualized credit cost: Declined to 0.9% in Q2 from 1.0% in Q1
  • Slippages remained benign across portfolio

Housing Finance Business Performance (Tata Capital Housing Finance)

  • AUM: ₹95,098 crores, growing 26% YoY and 6% sequentially
  • PAT: ₹552 crores for Q2
  • ROA: 2.5%
  • ROE: 18.0%
  • Affordable and micro housing portfolio grew 22% YoY and 5% sequentially

Operational Highlights

Distribution Network

  • Total branches: Approximately 1,515 branches across 1,094 locations in 26 states and union territories
  • Added 23 new locations in affordable and micro-housing during Q2
  • Customer base: Over 9.2 million customers

Disbursements

  • Consolidated disbursements: ₹51,665 crores, up 29% YoY
  • High-margin businesses disbursement growth: 40% YoY
  • High-margin businesses AUM growth: 14% (up from 10% in Q1)

Business Mix

  • Retail and SME businesses account for 85.4% of consolidated AUM
  • Portfolio remains diversified across secured/unsecured retail, housing, SME, corporate and Motor Finance segments

Funding and Liquidity Position

Borrowings Profile

  • Total borrowings: Approximately ₹2.61 lakh crores
  • Borrowing mix: Bank loans (39%), NCDs (35%), ECBs and MTNs (12%), Commercial paper and WCDL (9%), NHB borrowings (3%)
  • Cost of funds: Increased marginally to 7.33% from 7.28% in previous quarter

Liquidity

  • Available liquidity: Approximately ₹36,400 crores
  • AAA credit rating maintained

Capital Position

  • Consolidated equity: ₹47,778 crores
  • Debt-to-equity: 5.5x
  • Tata Capital standalone capital adequacy: 17.3% with CET1 at 14.7%
  • Capital raise planned for second half of FY28

Interest Rate Environment and ALCO Actions

RBI Policy Impact

  • RBI raised repo rate by 25 bps to 5.50% in October 2026
  • Expectation of 2 further rate hikes in FY27
  • Liquidity surplus moderated to below ₹1 lakh crore from nearly ₹5 lakh crores

ALCO Decisions

  • Approved 20-25 bps increase in prime lending rates on floating rate portfolio
  • Tata Capital: 25 bps increase effective November 1, 2026
  • Tata Capital Housing Finance: 20 bps increase effective November 1, 2026
  • Expected to support improving NIM plus fee trajectory from Q4 onwards

Asset-Liability Structure

  • Floating rate liabilities: 48% of total liabilities
  • Floating rate assets: 66% of loan portfolio
  • Structural positioning favorable for rising rate environment

Digital Transformation and AI Initiatives

Digital Adoption Metrics

  • 99% of customers digitally onboarded
  • 98% of retail disbursements supported by scorecard and business rule engine decisioning
  • 99% of collections through digital channels
  • 98% of customer queries digitally addressable
  • 180+ digital partnerships

AI Implementation

  • AI-generated content powers majority of marketing creatives
  • AI-led onboarding enabled over 30 lakh customer interactions
  • AI-powered credit intelligence processed over 7.8 crore documents
  • 95% adoption across personal loans and business loans underwriting
  • AI-led workflows process approximately 70% of retail applications
  • AI-powered voice and email platforms enable automated customer interactions

Regulatory Updates and Impact Assessment

Revolving Credit (Flexi Loans)

  • SRO (FIDC) has submitted recommendations to RBI
  • Company evaluating alternative product structures
  • Impact assessment: 3-4% of AUM potentially affected
  • Retail Flexi loans form about 2-2.5% of book
  • Testing alternative products with similar pricing

Insurance Distribution Norms

  • Draft proposals under discussion with regulator
  • Industry consultations ongoing
  • Impact not quantifiable until final regulations issued
  • Evaluating retail insurance products and mitigation through NIMs/fee income
  • Insurance remains important risk cover for customers

Business Segment Updates

Motor Finance Business

  • Portfolio rundown continuing but slowing
  • Q2 degrowth lower than Q1
  • Expect stabilization in Q3 and growth from Q4
  • NPA increase seasonal (Q2 typically highest)
  • Absolute slippages significantly lower YoY
  • Portfolio proportion: Down to 7.7% from 14.5% in March 2025
  • Created macro provision of ₹30 crores in CV business

Microfinance Business

  • Forms less than 1% of book
  • Showing improving asset quality trend and growth
  • Limited presence in drought-affected states
  • No exposure to tractor or farm loans

SME Business

  • Strong growth in Q2, contributing 45% of incremental growth
  • Growth from both term loans and supply chain financing
  • Supply chain well diversified (auto now 35% vs 2/3rd 4 years ago)
  • Tightened screens in certain SME segments due to macro concerns

Guidance and Outlook

Growth Guidance

  • Maintain FY27 growth guidance of 23-25%
  • Medium-term (FY25-FY28) growth guidance of 23-25% maintained
  • Expect retail momentum to pick up in Q3 and Q4

Margin Outlook

  • Q2 NIM declined ~10 bps (5 bps from cost of funds, 5 bps from competitive intensity)
  • Expect NIM plus fee to be stable in Q3 with marginal improvement
  • Distinct improvement expected in Q4
  • High-margin business AUM growth expected to mirror overall portfolio growth by Q4

Operational Efficiency

  • Cost-to-income ratio: 35.3% (improved 438 bps YoY)
  • Cost to average assets: 2.3%
  • Headcount growth: 6% vs AUM growth of 26%
  • Expect cost growth of 15% vs income growth of 25%

Other Material Information

Associate De-recognition

  • Gain of ₹186 crores from private equity exit
  • Only ₹27 crores flows to Tata Capital PAT after LP allocations

Branch Expansion

  • Net addition of 24 branches in Q2
  • Focus on scaling growth businesses especially affordable and micro housing

Geographic Presence

  • Limited rural exposure (only microfinance <1%)
  • Minimal presence in drought-affected states like Maharashtra