Tata Capital Limited, the financial services arm of the Tata Group, announced its financial results for the second quarter of fiscal year 2025-26, ending on September 30, 2025. The quarter’s performance reflected a mixed picture — while some numbers indicated strong growth, others showed mild pressure on profitability. The company’s consolidated net profit came in at around ₹1,097 crore, showing a modest rise of about 2 percent compared to the same period last year.
However, on a standalone basis, Tata Capital reported a 6.5 percent year-on-year decline in profit, bringing the figure to approximately ₹660.6 crore. This difference arises because consolidated numbers include all group subsidiaries, while standalone figures only reflect the parent entity’s results. Despite the variation, both sets of numbers confirm that the company’s business activity continues to expand at a healthy pace.
This quarter was also notable because it marked Tata Capital’s first earnings report since its high-profile stock market listing in early October 2025. Investors and analysts were eager to see how the newly listed company would perform under market scrutiny.
The most striking feature of the Q2 results was the strong increase in net interest income (NII). On a standalone basis, NII rose by about 76 percent year-on-year, reaching ₹5,043.3 crore, compared with ₹2,865.8 crore in the same period last year. Even on a consolidated basis, NII showed a solid jump of nearly 17 percent, climbing to approximately ₹3,004 crore from ₹2,560 crore.
This sharp rise in NII was driven by an increase in loan disbursals and improved yields on new loans. As interest rates in the market remained relatively high, Tata Capital benefited from better pricing on its lending products. The company’s portfolio grew steadily across various segments, especially in consumer loans, personal finance, and housing finance. Retail loan demand in urban and semi-urban markets remained robust, helping the company achieve greater interest income.
Revenue from operations also improved, rising around 8 percent year-on-year to ₹7,737 crore from ₹7,185 crore in the same quarter last year. This demonstrates that the company has managed to sustain growth in its core business despite a competitive lending environment.
While NII showed strong momentum, profit growth remained somewhat restrained. The consolidated net profit margin for the quarter stood at 14.18 percent, slightly lower than the 14.97 percent recorded in the same period last year. This marginal decline in margin reflects higher operating expenses and a slightly increased cost of funds.
For the standalone entity, net profit fell 6.5 percent year-on-year to ₹660.61 crore, reflecting the impact of elevated funding costs and certain one-time expenses related to the company’s recent public listing. However, the company also reported that its credit cost — the amount set aside for potential loan losses — declined by about 30 basis points compared to the previous quarter, showing that asset quality remained stable.
The dip in profitability despite higher income highlights that Tata Capital’s operational costs and interest expenses have risen in tandem with loan growth. This is typical for a fast-expanding non-banking finance company (NBFC), where the focus is on scaling up the loan book before achieving optimal efficiency.
Tata Capital’s asset quality indicators remained under control during the quarter. The company reported that its unsecured retail loan book — which accounts for about 11.6 percent of the total loan portfolio — had a gross non-performing asset (NPA) ratio of 1.6 percent and a net NPA ratio of 0.6 percent. These figures are broadly stable compared to the previous quarter, indicating that collection efficiency continues to be strong.
The company’s total assets under management (AUM) stood at ₹2,43,896 crore as of September 30, 2025, a 2.7 percent increase over the previous quarter ended June 30, 2025. The steady rise in AUM demonstrates consistent loan growth across key verticals such as consumer finance, home loans, and small business lending.
Tata Capital’s management emphasized that credit costs are being carefully managed and that collection efforts — particularly in motor finance and unsecured retail segments — have been intensified. The company continues to maintain a conservative provisioning policy to safeguard against any unexpected credit shocks.
The company’s various business segments showed differentiated performance during the quarter. The housing finance division recorded strong double-digit growth in both disbursements and profitability. Fee-based income from insurance distribution and wealth management also showed improvement, contributing to non-interest revenue.
Consumer loans and personal finance segments benefited from strong demand driven by festive spending and higher discretionary consumption. The infrastructure and corporate lending businesses remained stable, though growth was moderate compared to retail segments. Overall, Tata Capital’s diversified portfolio helped it balance risks and sustain earnings across changing market conditions.
Market reaction to Tata Capital’s Q2 results was relatively subdued. Since the company had just completed its much-anticipated IPO earlier in October 2025, investor focus was largely on assessing the sustainability of growth rather than immediate profitability. The stock remained broadly stable after the announcement, suggesting that investors viewed the results as satisfactory for a first post-listing quarter.
Analysts observed that while profit growth was moderate, the underlying operating performance was strong. The healthy rise in NII and a stable asset quality position were considered positive signs for the company’s long-term prospects. Tata Capital’s valuation remains closely tied to its ability to maintain double-digit growth in assets while protecting margins in a rising-rate environment.
Tata Capital’s management has outlined a clear growth strategy for the coming quarters. The company expects its assets under management to continue expanding at a high-teens rate over the full fiscal year. The main drivers of this growth are expected to be retail lending, housing finance, and the SME (small and medium enterprise) segment.
Sustaining the strong NII momentum will depend on how effectively the company can manage its cost of funds and operating efficiency. With India’s interest rate environment showing signs of stability, Tata Capital may find it easier to manage spreads going forward. However, competition among NBFCs is intensifying, and pricing discipline will be essential.
On the risk side, management remains cautious about unsecured lending. The company is maintaining tight credit standards and has enhanced monitoring in higher-risk segments to keep NPAs under control. As of now, asset quality remains healthy, and the provisioning buffer appears adequate.
For investors, Tata Capital’s second-quarter results offer a balanced view. On one hand, the company’s loan growth and NII performance demonstrate strong business momentum. On the other, the moderation in profit growth highlights the challenge of managing costs and maintaining margins in a competitive market.
Within the broader non-banking financial sector, Tata Capital’s results reaffirm the trend of steady credit demand, especially in retail lending. As one of India’s largest NBFCs, the company’s financial performance often serves as a barometer for the sector’s health. The data from this quarter suggests that the NBFC industry remains resilient and poised for sustainable expansion, supported by improving consumption and infrastructure investment.
Lastly, Tata Capital’s second-quarter results show a company in the midst of a growth phase. Net interest income surged sharply, supported by expanding loan volumes and healthy yields. However, the modest rise — and in some cases decline — in net profit reflects rising costs and some one-off expenses during a period of transition.
Asset quality remains strong, collections are stable, and the company’s balance sheet continues to strengthen. As Tata Capital navigates its first few quarters as a publicly listed entity, the focus will likely shift to improving profitability ratios, optimizing funding costs, and maintaining its impressive loan growth trajectory.
The overall message from Q2 FY26 is clear: Tata Capital is growing fast, managing its risks effectively, and positioning itself for a stronger performance in the coming quarters. While profit growth may temporarily lag behind income growth, the fundamentals remain robust, and the company’s long-term outlook stays positive.