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Tamilnad Mercantile Bank IPO: GMP jumps as bidding opens tomorrow. Apply or not? | Mint – Mint

Tamilnad Mercantile Bank IPO (initial public offering) is going to hit primary market tomorrow. The private lender, which is one of the oldest private sector banks in India, has fixed price band of its public offer at 500 to 525 per equity share and it will remain open of bidding from 5th September 2022 to 7th September 2022. Meanwhile, ahead of its subscription opening date, grey market has gone bullish on Tamilnad Mercantile Bank shares. According to market observers, shares of Tamilnad Mercantile Bank is available at a premium of 35 in grey market today.

Tamilnad Mercantile Bank IPO GMP today

Market observers said that Tamilnad Mercantile Bank IPO GMP (grey market premium) today is 35, which is Re 1 higher from its close price on Saturday. They said that Tamilnad Mercantile Bank IPO GMP today has almost remained steady and it has been oscillating around 35 for last three days despite weak sentiments on Dalal Street. They said that 7 to 8 per cent premium before subscription opening should not be taken lightly as it may shoot up once there is trend reversal in stock market sentiments.

What this Tamilnad Mercantile Bank IPO GMP means?

Market observers said that Tamilnad Mercantile Bank IPO today is 35 that means grey market is expecting that Tamilnad Mercantile Bank IPO would deliver around 35 per share listing gain to the investors or around 7 per cent listing gain against its issue price of 500 to 525 apiece. They expected further rise in the expected listing gain reflected by the grey market once the market sentiment turns from negative to positive.

However, stock market observers maintained that one should not rely on GMP as it is completely speculative data and it has no connect with the financials of the company. They advised potential investors to go through the balance sheet of the company and then only take any decision in regard to investment in the IPO.

Tamilnad Mercantile Bank IPO: Apply or not?

Giving ‘subscribe’ tag to Tamilnad Mercantile Bank IPO, Yes Securities says, “We rate the upcoming IPO of Tamilnad Mercantile Bank (TMB) a SUBSCRIBE due to the following key reasons: (1) We find the asset quality outcomes of TMB having reached a stage which can be regarded as stable and benign (2) We find the loan growth performance and outlook of TMB as reasonable (3) We find the operating expense control outcomes to be reasonable as well (4) 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 small-cap private sector banks, including TMB, across a variety of parameters and based on data obtained from outside the Red Herring Prospectus (RHP).”

Nirmal Bang has given ‘subscribe’ tag to the IPO citing, “TMB has demonstrated strong track record of successfully growing and managing a granular portfolio with superior asset quality metrics. TMB stands out among the old generation private banking peers on most metrics. We believe TMB can sustain ROA at around 1.5% levels in coming years on the back of stable NIM at around ~4.0% levels and decline in credit cost to below 1%. TMB is being offered at 1.35x FY22 BV which is at a slight discount to peer banks having similar return ratio profile. Although pending legal issues regarding the bank’s share capital shall continue to be a hangover; considering the quality of business, top quartile earnings profile in the banking industry and reasonable valuations, we rate the issue as ‘Subscribe’.

Highlighting upon the fundamentals of Tamilnad Mercantile Bank, Vinit Khandare, CEO & Founder at MyFundBazaar said, “Being one of the oldest private sector banks with a history of 101 years, the IPO offers a wide range of services primarily to micro, small and medium enterprises, agricultural and retail customers. However, the lender has a century old legacy and the valuations are reasonable at current levels. leaving a piece of the pie for its consumers. If the investor holds the risk appetite for a long-term basis, one can get decent returns in the good times and if expansion pans out well. The only downside is capped for the IPO due to its strong performance.”

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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