On Monday, September 5, 2022, public subscription for the three-day initial public offering (IPO) of Tamilnad Mercantile Bank will start. The sale will end on Wednesday, September 7. For its inaugural share offering of Rs. 832 crore, the Tuticorin-based private sector lender has set a price range of Rs. 500 to Rs. 525 per share.
According to market watchers, shares of Tamilnad Mercantile Bank are currently trading for a premium (GMP) of 31. On September 15, 2022, the company’s shares are anticipated to list on the BSE and NSE stock markets. The book-running lead managers for the public offering are Axis Capital, Motilal Oswal Investment Advisors, and SBI Capital Markets, while Link Intime India Private Ltd is the registrar.
The 1.58 crore equity shares in Tamilnad Mercantile Bank’s IPO will be a new issuance, and the bank plans to use the funds to increase its core capital, which will rise to 25% from the current 22% post-issue and also satisfy future capital requirements.
Having been founded in 1921 as Nadar Bank, Tamilnad Mercantile Bank (TMB) is one of the oldest private sector banks, with a history spanning 101 years. The bank provides a wide range of services, primarily to retail, agricultural, and small- and medium-sized business customers. The bank has 509 branches, of which 369 are in Tamil Nadu, its home state, where over 70% of its business is conducted. The remaining branches are dispersed over 15 states and four union territories.
“TMB can be a good investment avenue owing to its better growth with healthy asset quality, robust risk management system, equipped with basic retail banking infrastructure, and sizeable market to grow. However, pending legal matters may impact TMB if the verdict goes against the bank. At the upper price band of ₹525/-, stock is priced at 1.35x its FY22 book value (based on fully diluted post issue equity). We recommend subscribing to the issue from a long term perspective,” said the IPO note by Investmentz.com.
In fiscal 2022, the bank reported a net income of Rs 8,212 crore on revenue of Rs 4,656.4 crore, up from 603 crore and Rs 4,253 crore in fiscal 2021, respectively.