Tata Sons, with a valuation of ₹11 lakh crore, is obligated to prepare for its stock market debut by September 2025 following its categorization as an “upper-layer” NBFC (Non-Banking Financial Company). This mandate aligns with RBI (Reserve Bank of India) guidelines, which necessitate an “upper-layer” NBFC to go public within three years of receiving such classification. The RBI, on September 14, 2023, had included Tata Sons among the 15 financial firms in the “upper-layer” NBFC category.
Interestingly, another Tata group entity, Tata Capital Financial Services, also received the “upper-layer” NBFC classification but will not need to go public because it is merging with Tata Sons. If Tata Sons decides to conduct an initial public offering (IPO) by divesting 5% of its shares, the estimated size of the Tata Sons IPO would be approximately ₹55,000 crore. This would make it one of India’s largest public offerings, if not the largest.
Saurabh Jain, Vice President – Research at SMC Global Securities, explained that following RBI’s classification, Tata Sons has the option of reorganizing the company to remove it from the “upper-layer” NBFC list, rather than rushing into an IPO launch and share listing within the prescribed three years. However, he noted that the likelihood of an IPO within the specified timeframe is high, given the favorable market conditions for large IPOs, driven by ample liquidity in both the primary and secondary markets.
In accordance with RBI norms, an “upper-layer” NBFC that is not listed on the stock exchange must complete its IPO listing within three years of receiving this classification. Subsequently, such an NBFC would be subject to more rigorous and extensive regulatory compliance.
