Tamilnad Mercantile Bank IPO fully subscribed on day 2. Check latest GMP

The Initial Public Offer (IPO) of Tamilnad Mercantile Bank has been fully subscribed on the second day on Tuesday. The Tuticorin-based private sector lender has fixed the price band at ₹500-525 per share and the share sale will conclude on Wednesday, September 7. The lender on Friday said it has mobilised a little over ₹363 crore from anchor investors ahead of its issue.

As of 2:30 pm on day 2, the issue has been fully subscribed 1.18 times with retail category overbooked 2.67x, NIIs 0.92x and QIBs 0.73x, BSE data showed.

As per market observers, Tamilnad Mercantile Bank shares premium (GMP) have gone slighlty up from yesterday to ₹12 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 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.

“Company’s consolidated revenue growth of 5% over FY20-22 but interest/discount on advances was of 4.1% over FY20-22. It It will be challenging for the bank to grow its business in Tamil Naidu as well as new geographics. Looking at the current valuation of price to book of 1.4 times we believe that near term positive has been priced in the IPO price. Thus, we have a NEUTRAL rating on the issue,” said Angel One.

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.

"TMB is one of the oldest private sector banks in India with a consistent financial performance and healthy asset quality. At the upper end of the price band, the bank is valued at ~1.35x P/BV (post issue) as on March 31, 2022 which looks reasonable. However, a change in management and pending legal proceeding in relation to shareholding remain risks. We assign Subscribe only for long term rating to the IPO," said brokerage ICICI Securities.