Emkay Global maintains 'Add' on Tata Capital: Why the NBFC is betting big on high-yield loans

Brokerage firm Emkay Global reaffirms its bullish stance on Tata Capital, setting a ₹390 target price as the lender pivots toward aggressive growth.

The buzz around the tata capital share has intensified this week, with market watchers keeping a close eye on the lender’s roadmap. Emkay Global has officially reaffirmed its 'Add' rating, signalling confidence in the company’s ability to navigate current market headwinds. By setting a target price of ₹390, the brokerage is banking on the firm's strategic pivot toward high-yield lending to drive future value.

The growth blueprint

Management at Tata Capital has been vocal about its ambition for the coming years. The goal is clear: an Assets Under Management (AUM) CAGR of 23-25% by FY28. To hit these numbers, the company is consciously steering its portfolio away from traditional segments toward higher-yielding products. This includes a sharper focus on gold loans, affordable housing, micro-loans against property, and unsecured business and personal credit—a move designed to bolster net interest margins significantly.

Efficiency is also taking center stage. The management team is leveraging digital tools and artificial intelligence to cut down on operating expenses. These tech-driven interventions are expected to play a major role in reaching their RoA target of 2.5-2.7% by FY28, effectively helping the firm lower its credit costs while scaling operations.

Asset quality and the road ahead

For investors, the primary concern remains asset quality. Recent indicators offer some relief, as the firm noted a moderation in bounce rates as of June, suggesting that borrowers are maintaining healthy repayment habits despite broader macroeconomic uncertainty. Even the motor finance portfolio, which had previously hit some turbulence, is being groomed to turn into a growth engine by the second quarter of FY27.

While the rising cost of funds has been a persistent pressure point across the NBFC sector this year, there is a growing consensus that these costs are beginning to stabilize. This shift could provide the necessary breathing room for the firm to execute its expansion strategy without further margin compression.

Why it matters

The emkay global maintains stance highlights a broader trend in India’s financial landscape: large, established players are aggressively recalibrating to capture the "middle-of-the-pyramid" credit demand. By moving into high-yield segments, Tata Capital is not just chasing growth; it is attempting to optimize its risk-adjusted returns in a highly competitive market. If the firm successfully executes its digital transformation and maintains stable asset quality, it could set a benchmark for how traditional lenders evolve in an era of fintech-led disruption. The upcoming quarters will be a litmus test for whether this strategic shift can truly deliver the promised profitability.