Tata Capital lifts margin, but shares fall 3.63% in five sessions
Lower expenses supported the quarter-on-quarter profit rise, while interest costs increased 2.26% and the stock weakened after the results.
Filed 23 Apr 2026, 16:48 IST · after market close · Tata Capital Ltd (TATACAP)
Key takeaways
- Consolidated net profit rose 15.93% quarter on quarter to Rs 1,466.27 cr as operating profit increased 5.70%.
- Operating margin expanded 2.41 percentage points to 75.18% because revenue grew 2.32% while expenses fell 6.72%.
- The stock closed 1.00% lower after the results and was down 3.63% after five sessions, despite a 1.35% opening gap-up.
Price around the results
Lower expenses drove the Q4FY26 profit increase
Tata Capital reported consolidated revenue growth of 2.32% quarter on quarter, while expenses declined 6.72%; operating profit therefore rose 5.70%. Profit before tax increased 16.75% and net profit rose 15.93% to Rs 1,466.27 cr. The improvement was not driven by other income, which accounted for only 0.16% of pre-tax profit.
Margin reached a three-quarter high
Operating margin rose for the second consecutive quarter-on-quarter move, from 72.40% in Q2FY26 to 72.77% in Q3FY26 and 75.18% in Q4FY26. Interest expense still increased 2.26%, broadly alongside revenue growth, but the decline in expenses more than offset that pressure. The tax rate increased 0.52 percentage points to 25.89%, so the net profit rise was not flattered by a lower tax rate.
Tata Capital remained above the reported sector median
Its 75.18% operating margin was 15.77 percentage points above the 59.41% median for the 52 Financial Services companies that had reported the same quarter. The sequential margin expansion also places Q4FY26 well above the 72.40% recorded in Q2FY26, showing a clear improvement across the last two quarter-on-quarter comparisons.
Management highlighted expansion in vehicle finance
Management said the Tata Motors Finance acquisition was completed on May 8, 2025, and that more than 400 dealers had been added in the last nine months, with motor-finance products rolled out in 117 branches. The presentation said non-Tata OEMs contributed 26% of new-vehicle disbursements in Q4FY26, while used vehicles accounted for 40%; it also flagged GST-related narrowing of the price gap between new and used vehicles. Management's presentation listed FY26 guidance of 22–25% for AUM growth, 1.0–1.1% for credit cost and 35–36% for cost to income, and said IT integration was targeted for completion by Q1/Q2 FY27.
Shares weakened after the filing
The stock opened 1.35% higher but closed 1.00% lower on the first session after the results. Trading volume on the first session was 2.44 times normal.
Q4FY26 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q4FY26 | Q3FY26 | QoQ |
|---|---|---|---|
| Revenue | ₹8,160 cr | ₹7,975 cr | +2.32% |
| Other income | ₹3 cr | ₹-40 cr | — |
| Expenses | ₹2,026 cr | ₹2,172 cr | -6.72% |
| Operating profit | ₹6,134 cr | ₹5,804 cr | +5.70% |
| Operating margin (%) | 75.18% | 72.77% | — |
| Interest | ₹4,017 cr | ₹3,928 cr | +2.26% |
| Depreciation | ₹143 cr | ₹142 cr | +0.62% |
| Profit before tax | ₹1,978 cr | ₹1,695 cr | +16.75% |
| Tax | ₹512 cr | ₹430 cr | +19.13% |
| Net profit | ₹1,466 cr | ₹1,265 cr | +15.93% |
| EPS (₹) | ₹3.54 | ₹2.97 | +19.19% |
Operating margin of 75.18% compares with a Financial Services sector median of 59.41% across 52 peers that have reported Q4FY26.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | -1.00% | +0.14% |
| Next session | -2.08% | — |
| 5 sessions | -3.63% | -3.40% |
| 15 sessions | -11.05% | — |
| 30 sessions | -5.21% | — |
Volume on the results session was 2.44× its 20-day average.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
This quarter
- Non-Tata OEMs contributed 26% of new-vehicle disbursements in Q4FY26.
- Used vehicles represented 40% of disbursements in Q4FY26.
Guidance & outlook
- AUM growth guidance for FY26 was 22–25%.
- FY26 credit cost guidance was 1.0–1.1%.
- FY26 cost-to-income guidance was 35–36%.
- FY26 ROA guidance was 2.2–2.3%.
- PAT growth guidance for FY26 was approximately 32–35%.
Expansion
- Tata Motors Finance acquisition was completed on May 8, 2025.
- The company added over 400 dealers in the last nine months.
- Motor Finance products were rolled out in 117 TCL branches since March 2025.
New initiatives
- The company tied up with multiple OEMs and increased other OEMs’ contribution to new-vehicle disbursements.
- The company is pivoting toward used vehicles and focusing on ILMSCV within new vehicles.
- The company has repriced all liabilities.
- IT integration with Tata Capital is in progress, with completion targeted by Q1/Q2 FY27.
- The company reduced employee strength to 4,849 from 6,351 in March 2025.
Problems & risks
- The transformation is progressing amid a closely monitored commercial-vehicle cycle.
- GST narrowed the price difference between new and used vehicles, affecting used-vehicle disbursements.
What to watch
- Whether consolidated operating margin holds above 75.18%.
- Whether non-Tata OEMs' share of new-vehicle disbursements moves from 26%.
- Whether IT integration reaches management's Q1/Q2 FY27 completion target.