Price, Financials, GMP, Should you Invest?

Tamilnad Mercantile Bank IPO Opens Today: Tamilnad Mercantile Bank IPO will open for subscription on Monday, September 5. The bank aims to raise up to Rs 825 crore from its maiden share sale. Meanwhile, the bank on Sunday said veteran banker Krishnan Sankarasubramaniam has taken over as its managing director and Chief Executive Officer with immediate effect. The company on Friday said it has mobilised a little over Rs 363 crore from anchor investors ahead of its issue. It has decided to allocate 71.28 lakh equity shares to anchor investors at Rs 510 apiece, aggregating the transaction size to Rs 363.5 crore, according to a circular uploaded on the BSE website.

Tamilnad Mercantile Bank IPO: Subscription Date

Thoothukudi-based Tamilnad Mercantile Bank IPO subscription will remain open from September 5 to September 7. The proceeds from the IPO will be used to augment the tier-I capital base to meet future capital requirements.

Tamilnad Mercantile Bank IPO: Reserved Portions

Axis Capital, Motilal Oswal Investment Advisors, and SBI Capital Markets are the book-running lead managers and Link Intime India Private Ltd is the registrar for the IPO. 75 per cent of the issue has been reserved for qualified institutional investors, 15 per cent for non-institutional investors, and the remaining 10 per cent for retail investors.

Tamilnad Mercantile Bank IPO: Price Band

Tamilnad Mercantile Bank has set a price band of Rs 500-525 per share for the IPO, which is an entirely fresh issuance of shares — which means the proceeds will go to the company.

Tamilnad Mercantile Bank IPO: Lot Size

Potential investors will be able to bid for Tamilnad Mercantile shares in multiples of 28, which makes one lot worth Rs 14,000-14,700.

Tamilnad Mercantile Bank IPO: Financials

Tamilnad Mercantile Bank’s net profit has grown at a CAGR of almost 42 per cent between the years ended March 2020 and March 2022, according to Axis Securities. Its deposits increased at a CAGR of 10.5 per cent compared with a peer median of 7.9 per cent during this period, and advances rose 9.9 per cent, the brokerage highlighted in a note.

Tamilnad Mercantile Bank IPO: GMP Today

As per market observers, Tamilnad Mercantile Bank shares are available at at premium (GMP) of Rs 34 in the grey market today. The shares of the company are expected to list on stock exchanges BSE and NSE on Thursday, September 15, 2022.

Tamilnad Mercantile Bank IPO: About the Company

The bank is one of the oldest sector banks in India with a history of almost 100 years. It was initially formed as Nadar Bank Limited on May 11, 1921, and their name was changed to Tamilnad Mercantile Bank Limited in 1962.

It offers a wide range of services primarily to micro, small and medium enterprises, agricultural and retail customers. The bank operates 509 branches of which 369 are in the home state of Tamil Nadu, which fetches over 70 per cent of business and the rest of the branches are spread across 15 states and four Union territories.

Should you Subscribe?

Giving it an ‘Avoid’ tag, Aayush Agrawal, Senior Research Analyst, Swastika Investmart Ltd., said: “The precarious legal challenges and the lack of complete clarity on the management’s long-term performance make us averse to this issue. It is important to note that the management quality is paramount for any banking or finance company as it is synonymous with betting on the jockey, not the horse; thus, we suggest investors go for the existing listed banks where the management’s track record and performance during multiple credit cycles are visible. In short, large-sized banks and a few mid-sized banks are the best to ride on the upcoming credit and economic growth cycle”

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