Tamilnad Mercantile Bank IPO Opens Today. Should You Invest?

Tamilnad Mercantile Bank IPO: Tamilnad Mercantile Bank's share sale via initial public offering (IPO) opened today and will end on September 7. The south India-based private bank is one of India's oldest private sector lender in the country with presence in Indian markets for over 100 years. Tamilnad Mercantile Bank is planning to raise Rs 832 crore through IPO by selling 1.58 crore shares of face value of Rs 10 each.

Tamilnad Bank IPO: Should You Invest?

Yes Securities has 'subscribe' rating on the IPO as it says that bank's asset quality has reached a stage which can be regarded as stable and benign and it also finds its the loan growth performance and outlook as reasonable. 

"We find the operating expense control outcomes to be reasonable while cost of deposits is relatively on the higher side, the net interest margin outcome is healthy. It may be noted that this report contains an exhaustive comparative analysis of 11 mid and smallcap private sector banks, including TMB, across a variety of parameters and based on data obtained from outside the Red Herring Prospectus (RHP)," Yes Securities said.

“The financial track record has good for the company with total income and PAT growth of 7.99 per cent and 41.99 per cent CAGR over FY20-22. Its net interest margin has improved from 3.64 per cent in FY20 to 4.1 per cent in FY22. Its deposits and advances have grown at a healthy pace of 10.5 per cent and 9.9 per cent CAGR over FY20-22. On the valuation front, Tamilnad is valued at 1.4x pre-issue FY22 Price to Book Value,” brokerage firm Religare said

Tamilnad Mercantile Bank IPO: Price Band, GMP, Issue SIze, Lot Size, Bidding Details

Tamilnad Mercantile Bank is selling shares in price band of Rs 500-525 per share and retail investors can invest in minimum one lot of 28 shares up to maximum of 13 lots. At the upper end of price band, one lot of Tamilnad Mercantile Bank shares will cost Rs 14,700.

The Tuticorin-based lender, which does not have any identified promoter/promoter group as it is widely held by over 22,000 investors/shareholders -- including half a dozen foreign institutional investors who collectively own 23.2 per cent in the bank.

The six foreign investors are Robert & Ardis James Company (4.95 per cent), Starship Equity Holdings (4.72 per cent), Subcontinental Equities (4.64 per cent), East River Holdings (3.72 per cent), Swiss Re Investors Mauritius (1.90 per cent) and FI Invest Mauritius (1.48 per cent), according to the final IPO filing.

These shareholders will have to retain their holdings for the next six months after the IPO.

Tamilnad Mercantile Bank Issue Size

Tamilnad Mercantile Bank is planning to raise Rs 832 crore and the IPO is purely fresh issue of shares. The bank will utilise the proceeds from the IPO will be used to augment tier-I capital base to meet future capital requirements, meet offer issue expenses and to receive the benefits of listing the shares on the stock exchanges.