Before IPO Loss- TATA Capital

 When investments become status quo and not a planned objective based on one’s risk profile, the carnage of loss becomes more painful than financial loss. The bull market of the Indian stock market always created new opportunities for investors to lose money.   Brokers have always made money, but the clients always suffer a loss. The difference between the last 5 years' market rally and the previous 15 to 20 years is that investors have become more of a herd mindset, busy copying others' returns and investment products without understanding risk. The online disclaimer that equity investment is risky and subject to market fluctuations is not enough to make people understand the depth of loss one can face when making investments.

Another instance of investors being fooled or cheated by the astronomical prices of unlisted shares. The unregulated, uncontrolled prices and a proper mechanism of justification of prices lead to a huge loss for the investors who have been accumulating Tata Capital Unlisted shares from brokers under the guise of astronomical returns during the IPO. The speculation of the grey market premium is the cage where all are trapped.

As of late September 2025, Tata Capital's unlisted shares are trading in the range of ₹735 to ₹810 per share (face value ₹10). This reflects a significant decline from earlier peaks:

• 52-week high: ₹1,125 (April 2025)
• 52-week low: ₹765 (recent)

Recent trend: Down ~30-36% from April/June 2025 highs of ₹1,000-₹1,075, influenced by market volatility, a recent rights issue at ₹343 (July 2025), and broader financial sector weakness. Unlisted prices peaked at ₹1,125 in April 2025, implying a potential 64% drop to the IPO band.

  Now, one can relate to who and how much the hit has been for all those retail investors who have been lured by brokers. The IPO drop signals a potential correction for unlisted holders, as seen with HDB Financial Services' recent underwhelming debut. Post-IPO, a 6-month lock-in applies for pre-listing buyers. HDB Financial’s unlisted shares fell ~40% (₹1,200 to ₹740) before its June 2025 IPO, with a listing price of ₹777 (5% premium). Tata Capital mirrors this trend, with unlisted prices already correcting 30–36% since April. In the NSDL IPO (National Securities Depository Limited), unlisted shares traded at a premium pre-listing but plunged 35% on debut, leaving investors furious and highlighting the perils of overpaying in unlisted markets. Broader 2023-2025 trends show ~30% of Indian IPOs listing below issue price, amplifying losses for unlisted holders.

 The biggest question being asked by all those investors who are now trapped with higher prices is What went wrong?

 Well, unlisted shares traded at P/B 8.5–11x, far above listed peers (Bajaj Finance: 5.9x; Shriram Finance: 4x), driven by Tata brand hype and pre-IPO speculation. This valuation gimmick, created by unscrupulous brokers, has created a mess. The brokers have made but not the client. In many cases, there are multiple brokers involved, and it's a chain-like format.

Another question on the mind of the investors is how long it will take to get back to the unlisted prices level compared to the IPO price. Well, no message of condolence to the investors. Based on the analysis and other analytics reports, it is being found that  Tata Capital’s diversified portfolio (88% retail/SME, ₹2.37 lakh crore AUM, 28–37% CAGR) and Tata brand support growth, but high P/E (~113x) and modest ROE (12%) suggest limited near-term upside vs. peers. Further corrections are possible if GMP weakens or the market turns bearish. While unlisted investors face potential losses, IPO applicants may benefit from a lower entry point.

The Indian financial market needs more regulation and investor awareness programmes so that clients are protected.  The problem is that all reputable broking houses, wealth outfits all sold the same asset class at an exorbitant price. Now you can't put all of them into jail and prosecution.  The only way is to develop more rules and accountability regulations for the brokers for such prices when it becomes open to retail people.

Advice for Clients

1. Due Diligence: Vet company financials, management, and sector via platforms. Avoid momentum-driven herd mentality buys.
2. Portfolio Allocation: Limit to 5-10% of net worth; pair with listed assets for balance.
3. Exit Strategy: Monitor IPO filings; sell pre-listing if premiums peak, but factor in taxes (e.g., LTCG at 20% in India).
4. Use SEBI-registered advisors for valuation and lock-in planning.

If one does not understand the risk of investments in these products, like unlisted shares, one should invest only in Mutual funds.  Mutual funds are much safer compared to these unhedged risky investment products.  Always remember that Biriyani is not always good, but Dal-Khichdi is much better for health and for the wallet.