Tamilnad Mercantile Bank IPO: Retail portion oversubscribed on day 1. Check GMP, key details

Tamilnad Mercantile Bank's three-day initial public offering (IPO) has opened for public subscription today and will conclude on Wednesday, September 7. The Tuticorin-based private sector lender has fixed the price band at ₹500-525 per share. The lender on Friday said it has mobilised a little over ₹363 crore from anchor investors ahead of its issue.

At the end of Day 1 of bidding, the issue has been overall subscribed 0.83 times with retail investors' category booked 1.53x and NIIs 0.58x, BSE data showed. The Qualified Institutional Buyers (QIBs) was subscribed 0.73 times. 

Tamilnad Mercantile Bank IPO is a fresh issue of 1.58 crore equity shares. At the upper end of the price band, the bank is expected to mobilise ₹831.6 crore through its initial share sale. The bank proposes to utilise the proceeds from the issue for augmenting its Tier–I capital base to meet future capital requirements.

As per market observers, Tamilnad Mercantile Bank shares premium (GM) have come down to ₹7 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.

Yes Securities has given a Subscribe rating to the IPO as it finds the asset quality outcomes of TMB having reached a stage which can be regarded as stable and benign, the loan growth performance and outlook of TMB as reasonable, the operating expense control outcomes to be reasonable as well while cost of deposits is relatively on the higher side, the net interest margin outcome is healthy. 

“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.

Tamilnad Mercantile Bank (TMB) is one of the oldest private sector banks with a history of 101 years, having been established in 1921 as Nadar Bank. The bank 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% of business and the rest of the branches are spread across 15 states and four Union territories.