Tamilnad Mercantile Bank Ltd. IPO
Tamilnad Mercantile Bank Ltd.
IPO Listing Details
Listed On
BSE & NSE
Listed On
Issue Price
-
Issue Price
Listing Price
₹510
Listing Price
Listing Gains
+₹ (+0.00%)
Listing Gains
IPO Details
Bidding Dates
05 Sep - 07 Sep '22
Bidding Dates
Min. Investment
₹14,000
Min. Investment
Lot Size
28.00
Lot Size
Price Range
₹500 - ₹525
Price Range
Issue Size
436 Cr
Issue Size
Subscription Rate
- Retail Individual Investor6.48x
- Non-Institutional Investor2.94x
- Qualified Institutional Buyers1.62x
- Employees
About Company
The initial public offering (IPO) of Tamilnad Mercantile Bank (TMB), one of the oldest private sector banks in India, is set to open on September 5. The private lender offers a wide range of banking and financial services primarily to micro, small and medium enterprises (MSME), agricultural and retail customers. Incorporated in 1921, Tamilnad Mercantile Bank has 509 branches, of which 106 branches are in rural, 247 in semi-urban, 80 in urban and 76 in metropolitan centres and has an overall customer base of approximately 5.08 million as of March 31, 2022. As of March 2022, the bank’s deposits stood at Rs 44,930 crore and advances at Rs 33,490 crore. During fiscals 2020-22, the bank’s deposits increased at a CAGR of 10.46%, which falls in the top 5 amongst its peers. Its advances increased at a CAGR of 9.93%. Tamilnad Mercantile Bank IPO will open for public subscription on September 5 and close on September 7. The IPO consists of a fresh issue of 1,58,40,000 shares. The price band for the issue has been kept at Rs 500 to 525 per share. At the upper end of the price band, the company expects to raise around Rs 831.60 crore from the issue. The bank proposes to utilize the proceeds from the fresh issue of shares towards augmenting its Tier–I capital base to meet its future capital requirements and towards meeting the expenses in relation to the Offer.
Why should you invest in Tamilnad Mercantile Bank Ltd. IPO?
With a history of almost 100 years, Tamilnad Mercantile Bank is the most popular bank in southern India. It plans to expand its network pan-India. The bank has posted steady growth in its financials, while the prospects look better after the expansion of its network. Considering the medium to long-term prospects, the Tamilnad Mercantile Bank IPO also seems to be reasonably priced.
Financial Snapshot -Tamilnad Mercantile Bank Ltd IPO
Tamilnad Mercantile Bank has reported steady growth in its net profit in recent years, along with a rise in its interest income. The bank’s deposits grew at a healthy pace of 10.46% CAGR, while its advances grew at 9.93% CAGR. As of March 31, 2022, their deposits and advances portfolio in the state of Tamil Nadu has contributed 75.06% to its total business. Check the recent years’ financial performance of Tamilnad Mercantile Bank in the below table. It is always recommended to read the detailed financial statements and the draft red herring prospectus before investing in any new company via their IPO.
| Financial Year | Total Assets | Total Revenues | Net Profit |
|---|---|---|---|
| March 2020 | Rs 42,758.8 crore | Rs 3,992.53 crore | Rs 407.69 crore |
| March 2021 | Rs 47,527.17 crore | Rs 4,253.4 crore | Rs 603.33 crore |
| March 2022 | Rs 52,858.49 crore | Rs 4,656.44 crore | Rs 821.91 crore |
Important Dates - Dreamfolks Services Ltd IPO
| Application opens on | 5th September 2022 |
| Last date of application | 7th September 2022 |
| Date of Allotment | 12th September 2022 |
| Refund begins from | 13th September 2022 |
| Credit of shares to Demat | 14th September 2022 |
| Listing date | 15th September 2022 |
Tamilnad Mercantile Bank Ltd. IPO - SWOT Analysis
Strengths
With almost 100 years of history, Tamilnad Mercantile Bank has developed a strong legacy, loyal customer base and focus on improving its servicing framework. It is traditionally focused on small ticket size loan products to MSME customers and agricultural and retail customers for its growth. It is a professionally managed bank with an experienced senior management team and board of directors. The bank has strong asset quality, underwriting practices and risk management policies and procedures.
Weaknesses
Tamilnad Mercantile Bank has regional concentration in southern India, especially Tamil Nadu. Any adverse change in the economic, political, or geographical conditions of Tamil Nadu and other states in which it operates can impact its results of operations. The bank’s contingent liabilities exceed its net worth, which, if they materialize, may adversely affect its operations, financial condition and cash flows. It is significantly dependent on Retail, MSME and agri-financing customers and any adverse developments in these segments could affect its business.
Opportunities
The state of Tamil Nadu has a lower bank credit-to-GDP ratio which indicates a potential for Tamilnad Mercantile Bank to further lending in the state. The bank’s credit in the agriculture, retail housing, vehicle loan, industries and retail segments are also expected to grow going ahead.
Threats
Around 37.73% of the bank’s paid-up equity share capital or 53.76 million equity shares are subject to outstanding legal proceedings which are pending at various forums and, in connection with which, proceedings against the Bank have been initiated by various regulatory authorities, including the RBI, the Directorate of Enforcement, some of whom have imposed and sought to impose penalties on it in the past. Its former director has filed a writ petition before the High Court of Madras seeking to prevent the Bank from undertaking the Offer.
A competitive analysis
According to the offer documents, Tamilnad Mercantile Bank has shown Federal Bank, City Union Bank, RBL Bank, CSB Bank, DCB Bank, Karnataka Bank and South Indian Bank as its listed peers.
Take a look at these competitors:
| Company Name | Market Capitalisation(Rs.Cr) | 1-Year Return |
|---|---|---|
| Federal Bank | 25,452 | 46.07% |
| City Union Bank | 13,312 | 14.96% |
| RBL Bank | 7,320 | -28.95% |
| CSB Bank | 3,713 | -29.12% |
| DCB Bank | 2,897 | -5.20% |
| Karnataka Bank | 2,312 | 17.50% |
| South Indian Bank | 1,732 | -18.46% |
Tamilnad Mercantile Bank IPO Noteworthy Highlights
Check out some of the key details and information about Tamilnad Mercantile Bank IPO before investing:
- The book running lead managers (BRLM) to the Tamilnad Mercantile Bank IPO are Axis Capital, Motilal Oswal and SBI Capital Markets.
- Tamilnad Mercantile Bank IPO lot size is 28 shares, and a retail-individual investor can apply for up to 13 lots.
- In fiscal 2022, Tamilnad Mercantile Bank reported a comparatively low credit cost ratio of 0.27%. The Bank’s return on assets (RoA) was at 1.66% compared with peers that have a median RoA of 0.80%.
- The Return on Equity ratio outperformed peers at 16.58% in fiscal 2022. The bank is well-capitalised with a tier-1 capital adequacy ratio of 20.44%.
How to apply for Tamilnad Mercantile Bank Ltd. IPO?
You can apply for the Tamilnad Mercantile Bank Ltd. IPO in these ways:
UPI
Link your personal bank A/C to a trusted UPI ID and map it with your TradeSmart account. Now, proceed further to book your IPO. On acceptance of the mandate, the bid amount will get blocked in your bank account Learn more.
Demat Account
1. If you are an Existing TradeSmart demat account holder and wish to apply for an Tamilnad Mercantile Bank Ltd. click here.
2. If you don't have a TradeSmart Account? Sign up.
