Tamilnad Mercantile Bank IPO is 80% subscribed on Day 1

  • The private sector bank was underwritten 0.83x on the first day of the IPO underwriting process.
  • The private sector bank will raise ₹832 crore through a new equity issue of 1.58 crore.
  • The lender has set the price range at ₹500-525 per share.
  • Shares of the company command a premium of ₹35 on the gray market.

Thoothukudi-based Tamilnad Mercantile Bank’s initial public offering was 0.83 times subscribed during the first of the IPO subscription process.

The IPO received decent demand from retail investors on the first day, with that part being subscribed 1.53 times.

The private sector bank plans to raise ₹832 crore through a new equity issue of 1.58 crore. The lender has set the price range at ₹500-525 per share.

Proceeds from the IPO will be used to increase the Tier I capital base to meet future capital needs.

Investor category Subscription status
Qualified Institutional Buyers 0.73 times
Non-institutional investors 0.58 times
Detail 1.53 times
Globally 0.83 times

As of March 31, 2022, the lender has 509 branches, including 106 branches in rural areas, 247 in semi-urban, 80 in urban and 76 in metropolitan centers. Its advance portfolio consists mainly of retail clients, agricultural clients and MSMEs.

The bank has built a strong network of clients in the state of Tamil Nadu. As of March 31, 2022, Tamil Nadu contributes 75% of its deposits and advances.

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

Shares of the company currently command a gray market or GMP premium of ₹35 per share.

GMP is the premium at which IPO shares are traded on an unofficial market before being listed on a stock exchange. The IPO began on September 5 and will close on September 7.

Analysts recommended taking the IPO following the bank’s consistent performance over the years.

“TMB requires a slightly higher valuation than its peers given that TMB outperforms its peers in the majority of financial metrics. Given its consistent performance over past periods and a healthy yield ratio, we recommend a long-term subscription,” said a report by Anand Rathi.

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