Tamilnad Mercantile Bank Ltd. is coming up with its Initial Public Offering. The IPO will open for subscription on September 5th, 2022, and close on September 7th, 2022. It is looking to raise Rs. 831.60  Crores. In this article, we will look at the Tamilnad Mercantile Bank IPO Review 2022 and analyze its strengths and weaknesses. Keep reading to find out! 

Tamilnad Mercantile Bank IPO Review – About The Company

Tamilnad Mercantile Bank Limited (TMB) is one of the oldest and leading old private sector banks in India with a history of close to 100 years. The bank caters to micro, small and medium enterprises (“MSME”), agricultural and retail customers (“RAM”).

Tamilnad Mercantile Bank IPO Review - Total Assets

As of June 30, 2021, the bank has 509 branches, of which 106 branches are rural, 247 in semi-urban, 80 in urban, and 76 in metropolitan centres with an overall customer base of approximately 4.93 million. The company reported deposits of ₹ 409.70 billion and advances of ₹ 310.70 billion as of March 2021.

Tamilnad Mercantile Bank IPO Review- Financial Highlights

Tamilnad Mercantile Bank IPO Review - Financials

(Source: DRHP of the company)

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Tamilnad Mercantile Bank IPO Review- Competitors

Tamilnad Mercantile Bank IPO Review – Industry Overview

Public banks which accounted for 71% share in credit outstanding in Fiscal 2015, account for only 59% share as of Fiscal 2021 while the rest was captured by the private banks.

The covid-19 pandemic disrupted the sector as the entire economy halted and credit circulation was interrupted. To combat the situation RBI, India’s central bank announced a host of measures to enhance liquidity, ease financial market conditions, address cash flow concerns, and improve market sentiment following a near-halt in economic activity.

The banking sector enjoyed healthy deposit growth of 10% compound annual growth rate (CAGR) between Fiscals 2015 and 2020. In FY22-23 the deposit growth is expected to slow down to 6-8%.

In Fiscal 2022, agri-loans are expected to increase 10-11% on year provided the monsoon is normal and on expectations of higher food grain and horticulture production, and support from the agri-fund.

Strengths of the Company

  • The company has a strong legacy, a loyal customer base, and a wide network of branches.
  • The bank has a strong presence in Tamil Nadu and is consistently focusing to expand its presence in strategic regions.
  • The bank also is Consistently growing its deposit base with a focus on low-cost retail CASA  (current and savings account) ratio.
  • The bank has Strong asset quality, underwriting practices, and risk management policies and procedures in place.
  • It is a professionally managed Bank with an experienced senior management team and a board of directors.

Weaknesses of the Company

  • A total of 37.61% of their paid-up equity share capital or 53.59 million Equity Shares are subject to outstanding legal proceedings which are pending at various forums.
  • An increase in the bank’s portfolio of Non-Performing Assets (NPAs) may adversely affect the business.
  • The bank is required to lend a minimum percentage of our Adjusted Net Bank Credit (“ANBC”) to certain priority sectors. Any decline in performance will affect them.
  • The bank is exposed to certain inherent risks like interest rate risks, fraud, petty theft, negligence, embezzlement, and technological risks.
  • The main source of revenue for the bank is the fees they charge. Any change in that will alter the ability of the bank to generate revenue.

Tamilnad Mercantile Bank IPO Review- GMP

The shares of Tamilnad Mercantile Bank traded at a premium of 4.19% in the grey market on August 31st, 2022. The shares traded at Rs 547. This gives it a premium of Rs 22 per share over the cap price of Rs 525.

Tamilnad Mercantile Bank IPO Review- Key IPO Information

Promoters: The Bank is a professionally managed bank and does not have an identifiable Promoter. 

Book Running Lead Managers: Axis Capital Limited, Motilal Oswal Investment Advisors Limited, and SBI Capital Markets Limited.

Registrar To The Offer: Link Intime India Private Limited.

IPO Size₹831.60 Cr
Fresh Issue-
Offer for Sale (OFS)-
Opening dateSeptember 5, 2022
Closing dateSeptember 7, 2022
Face Value₹10 per share
Price Band₹500 to ₹525 per share
Lot Size28 Shares
Minimum Lot Size1 (28)
Maximum Lot Size13 (364)
Listing DateSeptember 15, 2022

The Objective of the Issue

The net proceeds from the issue will be utilized for the following purposes:

  • To augment the tier-I capital base to meet future capital requirements.
  • Meet offer issue expenses.
  • To receive the benefits of listing the shares on the stock exchanges.

In Closing

In this article, we looked at the details of Tamilnad Mercantile Bank Limited IPO Review 2022. Analysts remain divided on the IPO and its potential gains. This is a good opportunity for the investors to look into the company and analyze its strengths and weaknesses. That’s it for this post.

Are you applying for the IPO? Let us know in the comments below.

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