Tamilnad Mercantile Bank IPO: GMP, price band, key details as issue opens for subscription next week

As per market observers, Tamilnad Mercantile Bank shares are available at at premium (GMP) of ₹31 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. Axis Capital, Motilal Oswal Investment Advisors and SBI Capital Markets are the book-running lead managers and Link Intime India Private Ltd is the registrar for the public issue.

Tamilnad Mercantile Bank IPO will be a fresh issue of 1.58 crore equity shares and the bank proposes to utilise the proceeds to augment its core capital, which will touch 25% from the present 22% post issue and also meet future capital requirements.

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. The bank operates 509 branches of which 369 are in the home state of Tamil Nadu, which fetches over 70% of business and the rest of the branches are spread across 15 states and four Union territories.

“TMB can be a good investment avenue owing to its better growth with healthy asset quality, robust risk management system, equipped with basic retail banking infrastructure, and sizeable market to grow. However, pending legal matters may impact TMB if the verdict goes against the bank. At the upper price band of ₹525/-, stock is priced at 1.35x its FY22 book value (based on fully diluted post issue equity). We recommend subscribing to the issue from a long term perspective,” said the IPO note by Investmentz.com.

The bank reported a net income of ₹8,212 crore in fiscal 2022 on an income of ₹4,656.4 crore, as compared to ₹603 crore and ₹4,253 crore in FY21, respectively.

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