Tamilnad Mercantile Bank IPO
The maiden public issue of Tamilnad Mercantile Bank continued to see good participation on September 6, the second day of subscription. The offer received bids for 1.05 crore shares against IPO size of 87.12 lakh shares, getting subscribed 1.22 times.
Retail investors remained ahead in terms of subscription, booking their quota 2.94 times, while non-institutional investors bought 1.05 times of their reserved portion.
Good response was also seen from qualified institutional investors with their portion getting subscribed 73 percent.
The issue size has been reduced to 87.12 lakh shares from 1.58 crore shares after healthy response to the anchor book. The company plans to raise Rs 831.60 crore through its public issue, of which Rs 363 crore has already been raised from the anchor book on September 2.
The firm will utilise issue proceeds for augmenting its Tier I capital base to meet future capital requirements.
The price band for the offer, which closes on September 7, has been fixed at Rs 500-525 per share.
Tamilnad Mercantile Bank is one of the oldest private sector banks in India with consistent financial performance and healthy asset quality. At the upper end of the price band, the bank was valued at 1.35x P/BV (price-to-book value post issue) as of March 2022 which looks reasonable, ICICI Direct said.
However, a change in management and pending legal proceedings in relation to shareholding remain risks, the brokerage feels. Hence, it has assigned a subscribe-only rating for the IPO in the long term.
Also read – As Tamilnad Mercantile Bank IPO opens, should you subscribe?
Tamilnad Mercantile Bank clocked 42 percent compound annual growth rate in profit and revenue grew at 17 percent CAGR during FY20-FY22.
The lender primarily focuses on the RAM segment (retail, agriculture and MSME) which accounted for around 88 percent of total advances as of March 2022. It has built a strong presence in Tamil Nadu, with 369 branches and 949 ATMs as of March 2022.
The lender has 509 branches in total, of which 247 are in semi-urban, 106 in rural, 76 in metro and 80 in urban areas.
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