📰Tata Announces Major IPO

Good evening, 

Welcome to the best way to stay up-to-date on India’s financial markets. Here’s what’s in today’s newsletter:

• Tata announces a huge IPO,

• India is considering significant revisions to its bankruptcy laws,

• and India is set to finalize a $1 billion (₹86.8 billion) capital subsidy plan aimed at strengthening its solar manufacturing industry.

Then, we close with Gupshup, a round-up of the most important headlines.

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—Shreyas, [email protected]

Market Update.

Tata Capital Announces a Huge IPO

Tata Capital, the financial arm of the Tata Group, has announced plans for one of India’s largest IPOs of 2025. The company intends to sell 230 million new shares, accompanied by a rights offering for existing shareholders, according to a recent exchange filing. Although the total offering value wasn’t disclosed, reports suggest the IPO could raise at least $1.7 billion (₹150 billion), surpassing the anticipated $1.5 billion (₹ 130.5 billion) IPO from LG Electronics India unit.  

Tata’s growth: Headquartered in Mumbai, with international offices in Singapore and London, Tata Capital manages loans exceeding $17.2 billion (₹1.5 trillion). The company serves a broad customer base through a network of over 900 branches, offering services such as retail loans, microfinance, credit cards, and private equity financing.  

This upcoming IPO highlights the Tata Group’s continued market momentum, following the successful listing of Tata Technologies in 2023. Tata Tech’s debut became the best-ever for an Indian company raising more than $300 million (₹26.1 billion), with shares more than doubling on their first trading day.  

News of Tata Capital’s IPO boosted Tata Investment Corp. shares by up to 10 percent, given its holding of over 80 million shares in Tata Capital. Currently, Tata Capital’s unlisted shares are valued at 13 times the company’s book value, a premium compared to industry peers.  

India’s IPO market remains robust, raising over $20 billion (₹1.7 trillion) last year, second only to the US. With Tata Capital’s anticipated listing, 2025 is shaping up to be another standout year for India’s equity markets.

Bankruptcy Law Needs Some Restructuring

India is considering significant revisions to its bankruptcy laws to address mounting concerns over prolonged insolvency proceedings and declining recovery rates. The Insolvency and Bankruptcy Board of India (IBBI) is finalizing proposals aimed at streamlining court processes, with public consultations set to conclude soon, though the deadline may be extended.  

Current issues: Despite Modi’s administration revamping bankruptcy regulations nearly a decade ago, mandating resolutions within 330 days, cases frequently exceed this limit. Recent data shows that courts took an average of 821 days to approve resolution plans in the nine months through December — 35 percent longer than the previous fiscal year. Liquidation orders also faced substantial delays, averaging 655 days.  

These delays have eroded asset values and significantly reduced lender recoveries. Recovery rates have plummeted from 46 percent in 2018-2019 to just 28 percent in the financial year ending March 2024, according to RBI data. The US, on the other hand, has a recovery rate of 76 percent on average with a median of 95 percent according to Fitch.   

Americanization. The proposed reforms include joint court hearings for complex, interconnected businesses, reducing delays caused by handling them as separate cases. Other measures aim to resolve creditor disputes more efficiently and promote interim financing, allowing lenders to participate in creditor meetings as observers. A quick glance at these changes — especially relating to creditor financing — reveals the influence that Chapter 11 in the US is having on the proposals. Debtor-in-possession financing and liability management exercises are common in the states that would proliferate in India with these proposed changes. 

Experts believe these changes could encourage private credit funds to participate more actively in India’s insolvency market. Private credit has grown rapidly in the US and Europe where there are more developed bankruptcy codes that allow for protection if lending to a distressed borrower. The overhaul could also provide a boost to India’s asset reconstruction companies (ARCs), which specialize in managing bad debts by purchasing non-performing loans from traditional lenders.

Going Green Without China

India is set to finalize a $1 billion (₹86.8 billion) capital subsidy plan aimed at strengthening its solar manufacturing industry, according to sources familiar with the matter. The initiative, spearheaded by the Ministry of New and Renewable Energy, targets domestic production of wafers and ingots — critical yet underdeveloped components of India’s solar supply chain. Both items are used to create sunlight-absorbing cells. 

The plan, backed by key advisers in Modi’s office, is expected to be presented to the cabinet within the coming months. A government spokesperson confirmed that discussions are ongoing with stakeholders, although a formal proposal has yet to be approved.  

India currently relies heavily on China for solar equipment, posing a risk to its energy security. While domestic capacity for solar modules and cells has expanded to over 71 gigawatts and 11 gigawatts respectively, wafer and ingot production remains limited to just 2 gigawatts, primarily from Adani Enterprises.  

The aim of new measures: The proposed subsidy aims to replicate the success of India’s mobile phone manufacturing push, which attracted global giants like Apple and Samsung. Logistics and quality control challenges have driven up production costs for wafers and ingots, and the government hopes that financial incentives will help overcome these barriers.  

Despite the planned expansion, India will still need to import polysilicon, the raw material for wafers and ingots. China currently leads global polysilicon production with an annual capacity of 2.3 million tons, far ahead of Germany’s 75,000 tons, highlighting the continued reliance on foreign suppliers.

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Gupshup.

Macro

• The RBI is removing risk weights on loans to make lending to consumers easier. The RBI saw a massive slowdown in bank credit, tighter market liquidity, and a lack of credit flow to needy consumers. The risk weights should improve growth in the retail sector immensely since the 25 percent weights were first added against non-collateralized businesses. 

• Fmr. RBI governor Rajan believes growth will be beneath target due to labor mismatches. He sees the skill base as wrong due to highly educated young adults not finding the requisite jobs. Almost all of the time, they are too qualified for open positions and he estimates that India would have to grow at another 2 percent (in addition to the 6 percent already) to properly help them. 

• Liquidity deficits rose to the highest since 2010 in January and the RBI might start doing daily operations. Lenders’ overnight borrowing costs have hovered above the benchmarks which complicates accommodative efforts.  

Equities

• Adani announces another $8 billion (₹696 billion) worth of investment in Assam, a day after investing $10 billion (₹870 billion) in Madhya Pradesh. Keep in mind that investment ideas at summits are hardly binding, but the announcements signal how Adani is ready to keep growing his infrastructure empire. The main issue with both projects will likely be funding — for neither investment did the Corp. reveal funding sources.  

• Suzuki Motor opens the first new Indian plant in 8 years to create 250,000 cars a year. This will eventually scale to a million cars per year to become one of Asia’s largest production facilities. The growth comes as a bid to capture India’s growing auto-reliance which has made it the third largest auto-market in the world. 

• Quick-commerce or delivery will struggle to maintain growth. Booming quick-commerce has grown to $7.1 billion (Rs.617.7 rupees) but will likely see its monthly users to taper off as living costs continue to rise. Additionally, competition is increasing across these firms due to new entrants.  

Alts

• Axis Bank is looking to sell a majority of its $1 billion (₹87 billion) stake in its shadow bank. Shadow banks like Axis typically target customers with limited banking services due to low income or lack of credit. There are usually higher interest rates on loans which can lead to greater default risk.

Policy

• EU President Ursula is likely to ask India for help enforcing Russia sanctions this week. The EU will look to add points by saying that India is threatened by the conflict as much as Europe is and that India is instrumental to ending the war. Right now, India only follows sanctions placed by the UN itself. Other points at the meeting could be to set up a full India-EU summit later this year.

See you Wednesday.

Written by Yash Tibrewal. Edited by Shreyas Sinha.

Disclaimer: This is not financial advice or recommendation for any investment. The Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.