Tata Capital vs LG Electronics: A Deep Dive into Two Mega IPOs

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It feels like the quiet before a storm in the Indian capital markets. While nearly 200 other companies are sitting on the sidelines, two absolute giants are stepping into the spotlight, ready to launch initial public offerings (IPOs) worth a staggering Rs 27,000 crore combined. We're talking about Tata Capital Ltd, the financial powerhouse of the Tata Group, and LG Electronics India Ltd, the name behind many of our favorite home appliances. It’s a pretty exciting time for investors, but there's a lot to unpack here.

Key Highlights

• ✓ Two mega IPOs worth a combined Rs 27,000 crore are hitting the market: Tata Capital and LG Electronics India.
• ✓ The Tata Capital IPO aims to raise a massive Rs 15,512 crore, making it the fourth-largest in Indian history.
• ✓ LG Electronics India is looking to mobilize over Rs 11,000 crore, but it's purely an offer for sale (OFS).
• ✓ A significant portion of the proceeds, about Rs 18,500 crore, will go to the promoters (Tata Sons and LG Korea) rather than funding company expansion.
• ✓ Analysts are generally positive for long-term investors but have flagged some key differences and cautions for both issues.

Both companies have strong fundamentals, and the buzz is that they're solid bets for anyone with a long-term view. However, they are not created equal, and there's a crucial detail everyone's talking about: a huge chunk of the money raised is going straight to the promoters, not back into the businesses. Let's get into the nitty-gritty of what this all means for you.

The Tata Titan: A Closer Look at the Tata Capital IPO

First up is the big one from the house of Tata. After the blockbuster debut of Tata Technologies last year, the group is back with its flagship financial services arm, Tata Capital. And when I say big, I mean it. This IPO is aiming to raise a colossal Rs 15,512 crore, making it the fourth-largest IPO in the history of our domestic markets and the biggest ever in the non-banking financial company (NBFC) space. That alone is enough to get anyone’s attention.

The IPO opens on October 6 and closes on October 8, with a price band set at Rs 310-326 per share. At the upper end, this would give the company a post-issue market capitalization of around Rs 1.38 lakh crore. The offering is a mix: a fresh issue of shares worth Rs 6,846 crore, and an offer for sale (OFS) worth Rs 8,666 crore. In simple terms, the money from the fresh issue goes directly to Tata Capital to strengthen its capital base for future lending, while the OFS money goes to the selling shareholders, mainly promoter Tata Sons and International Finance Corporation (IFC).

The interest is already palpable. Within the first hour of bidding, the IPO was subscribed 15%. And even before opening, Tata Capital had already secured Rs 4,641.8 crore from 135 anchor investors, including heavyweights like Life Insurance Corporation of India, Goldman Sachs, and Morgan Stanley. This is a clear vote of confidence from the big players in the market.

💡 What's Interesting: This is only the second public offering from the entire Tata Group in nearly two decades, following the wild success of the Tata Technologies IPO in November 2023. The brand's trust and rarity are definitely adding to the hype.

What the Experts are Saying about Tata Capital

So, with all this excitement, what's the verdict from the analysts? For the most part, it's positive. Brokerages like Anand Rathi Share & Stock Brokers have given the IPO a 'Subscribe' rating for the long term. They're pointing to the company's strong loan-book growth, stable margins, and low credit costs as major green flags. The company's financials back this up, with profit after tax jumping to Rs 3,655 crore in FY25 from Rs 3,327 crore the previous year.

Prashanth Tapse, a Senior VP at Mehta Equities, mentioned that the pricing seems sensible. He noted that the management has priced the IPO "slightly below the industry average, leaving decent headroom for a healthy listing pop." This is exactly what retail investors love to hear. However, it’s not all smooth sailing, and there are a couple of points causing some chatter among investors.

One area of concern is the grey market. Shares of Tata Capital were reportedly trading at over Rs 500 apiece in the unlisted market. With the IPO price being almost 50% lower, it has created what one analyst called "some negativity." Another point of caution is simply the sheer size of the issue. Some believe that because the IPO is so large, investors shouldn't expect a massive surge on listing day.

LG's Big Market Debut: Here's What to Know

Now, let's switch gears to the second mega-offering from LG Electronics India. This one aims to raise a hefty Rs 11,607 crore, with a price band of Rs 1,080 to Rs 1,140 per share. The issue will be open for subscription from October 7 to October 9. At the upper price band, the company is valued at over Rs 77,000 crore. We all know LG; they make everything from our washing machines and refrigerators to our TVs, with manufacturing units in Noida and Pune.

But here's the crucial difference. The LG IPO is purely an offer for sale (OFS). This means the company's promoter, LG Electronics Inc. of South Korea, is selling off a 15% stake in its Indian subsidiary. What's the catch? The entire Rs 11,607 crore raised will go directly to the South Korean parent company. Not a single rupee will be injected into LG Electronics India for its own growth or expansion.

While analysts have broadly advised investors to subscribe, this OFS structure is a major point of caution. It signals that the IPO is more of an opportunity for the parent company to unlock value rather than a fundraising exercise for the Indian business's future. This can understandably make some long-term investors a bit hesitant about its growth prospects.

The OFS Caution Flag: A Lesson from Hyundai?

This situation might be giving some market veterans a sense of déjà vu. It's reminiscent of the Hyundai Motor India IPO launched last year. That was another massive issue, but just like LG's, the entire proceeds went to its South Korean promoter, Hyundai Motor Company. The result? The retail portion of the IPO was undersubscribed, and the stock made a weak debut, listing at a discount to its issue price.

Of course, every company is different, and LG has a strong brand presence in India. But the Hyundai example serves as a recent, relevant reminder of how the market can react to IPOs that are structured purely for the promoter's benefit. It’s a key factor to consider when weighing the pros and cons of the LG issue.

Conclusion

So, here we are, with two massive opportunities knocking on the door. On one hand, you have the Tata Capital IPO, a behemoth from a trusted group that is raising money for both its own growth and its promoters. The sentiment is largely positive, though tempered by discussions around its large size and grey market pricing. It feels like a solid, long-term story.

On the other hand, the LG Electronics India IPO is a different beast. It's an established, profitable company, but the public issue is a pure promoter exit. While it might still be a good investment, the fact that no funds are being reinvested into the Indian entity is a significant detail. Ultimately, both IPOs offer strong fundamentals, but they're built for different purposes, and as always, it’s wise for investors to look beyond the brand names and understand exactly where their money is going.