Tamilnad Mercantile Bank IPO Review – Should you Invest or Avoid?
Tamilnad Mercantile Bank IPO (TMB IPO) Details
Thoothukudi (Tamilnadu) based Tamilnad Mercantile Bank is coming up with IPO, which would open for subscription on 5th September, 2022. Tamilnad Mercantile Bank is one of the oldest and leading private sector banks in India with 100 years of history. This bank has generated strong revenue and margin growth in the last 3 years. Should you invest in Tamilnad Mercantile Bank IPO? What are the risk factors in this IPO? In this article we would provide TMB IPO Review with detailed analysis.
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About Tamilnad Mercantile Bank Limited
This bank is one of the oldest and leading old private sector banks in India with a history of over 100 years.
They offer a wide range of banking and financial services primarily to micro, small and medium enterprises, agricultural and retail customers.
It has 509 branches, of which 106 branches are in rural, 247 in semi-urban, 80 in urban and 76 in metropolitan centres.
Its overall customer base is approx 5.08 mn as of Mar-22.
Tamilnad Mercantile Bank IPO (TMB IPO) – Dates, Details, Size and Price Band
|IPO Opening Date||05-Sep-22|
|IPO Closing Date||07-Sep-22|
|Issue Type||Book Built Issue IPO|
|Face Value||Rs 10 per equity share|
|IPO Price band||Rs 500 to Rs 525 per equity share|
|Lot Size||28 Shares|
|Min Order Quantity||28 Shares|
|Listing at||BSE and NSE|
|Total Issue Size||Rs. 831.6 Crores|
Tamilnad Mercantile Bank IPO RHP
What are the competitive strengths of Tamilnad Mercantile Bank Limited?
1) Bank has strong legacy, loyal customer base and focus on improving servicing framework
3) It has strong presence in Tamil Nadu with a focus to increase presence in other strategic regions
3) Advances with focus on MSME, agricultural and retail segments
4) It has consistently growing deposit base with focus on low-cost retail CASA
5) It is professionally managed Bank by experienced senior management team and board of directors.
6) Bank has strong asset quality, underwriting practices and risk management policies and procedures.
7) It has consistent financial performance
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What are the Objects of the IPO Offer?
Tamilnad Mercantile Bank IPO Size is Rs 831.6 Crores and the proceeds would be used for the following:
- To augment tier-I capital base to meet future capital requirements.
- Offer issue expenses.
- Receive listing benefits
Who are the promoters of Tamilnad Mercantile Bank Limited?
Tamilnadu Merchantile Bank is a professionally managed bank and does not have an identifiable promoter.
Key Performance Indicators in Tamilnad Mercantile Bank Limited
Here are the total assets, revenues and profits of the company in the last 3 years.
|Financial Year ending / Period ending (Amt in Crores)|
|Profit After Tax||464.9||654.0||901.9|
Positive Factors in Tamilnad Mercantile Bank IPO
Here are the key reasons to invest in this IPO.
1) TMB is one of the oldest private sector banks in India with over 100 years of history.
2) Company has strong and loyal customer base and strong presence in Tamil Nadu and other strategic regions.
3) Company has generated strong revenue growth in the last 3 years. Its revenues grew from Rs 3.992.5 Crores in FY20 to Rs 4,656.4 Crores in FY22.
4) Company has generated strong profitability growth in the last 3 years. Its margins grew from Rs 464.9 Crores in FY20 to Rs 901.9 Crores in FY22.
Risk Factors of investing in Tamilnad Mercantile Bank IPO
1) There is 37.3% of paid up equity share capital / 53.7 mn equity shares which have outstanding legal proceedings which are pending with various forums and proceedings against the bank have been initiated by various regulatory authorities including RBI etc. Any adverse effect can impact the business and operations of the bank.
2) The Bank has received and, in the future, receive multiple anonymous whistle blower complaints which may adversely affect the reputation of the bank and can affect business.
3) Bank’s former director has filed a writ petition before high court of Madras seeking to prevent the bank from undertaking the offer and have received multiple complaints from former directors and shareholders of the bank regd disclosures in the DRHP and invitations to participate in offer for sale and any of which could harm them by impairing its ability to retain clients, subject them to significant legal liability, cause reputational harm and prevent them from proceed with this offer.
4) The Bank has a regional concentration in southern India mainly in Tamil Nadu. Any adverse change in the economic, political, geographical conditions in this state can impact the results of the operations.
5) Investors should read complete risk factors indicated in the RHP before investing in this IPO.
Tamilnad Mercantile Bank IPO valuation
Tamilnad Mercantile Bank IPO price band is Rs 500 to 525 per share.
1) If we consider last 3 years weighted average EPS of Rs 47.72 and the upper price band of Rs 525, P/E works out to 11x.
2) Similarly, if we consider FY2022 EPS of Rs 57.67 and the upper price band of Rs 525, P/E works out to be 9x.
3) Means company is asking the upper band of IPO price of Rs 525 in the P/E ratio of 9x to 11x.
As per the RHP, there are listed peers like South Indian Bank at P/E 35.8x (Highest) and Karnataka Bank trading at P/E 3.3x (Lowest) and the industry average P/E is 11.8x. Hence the IPO Price of Tamilnad Mercantile Bank IPO at P/E range of 9x to 11x is fully priced.
Tamilnad Mercantile Bank IPO Dates – Subscription, Allotment and Listing Dates
|Finalization of Allotment||12-Sep-22|
|Initiation of Refunds||13-Sep-22|
|Credit to Demat Account||14-Sep-22|
|IPO Shares Listing Date||15-Sep-22|
How to buy Tamilnad Mercantile Bank IPO online through Zerodha?
You can login to your demat account, visit the IPO section and apply for this IPO during the subscription dates.
You can also apply this IPO on Zerodha. If you do not have Zerodha account, sign-up here and proceed to the next step.
Zerodha customers can apply in this IPO by login into Zerodha Console submitting an IPO application form.
Follow below steps to apply this IPO in Zerodha platform:
1) Visit the Zerodha portal and login to the console.
2) Go to Portfolio and click the IPOs link.
3) Visit ‘Tamilnad Mercantile Bank Limited IPO’ row and click the ‘Bid’ button.
4) Enter your UPI ID, Qty and the Price which you want to bid.
5) Click on ‘Submit’ IPO application form.
6) Visit the UPI App (net banking or BHIM) to approve the mandate.
Tamilnad Mercantile Bank IPO Review – Should you Invest or not?
Tamilnad Mercantile Bank Limited (TMB) is one of the oldest and leading private sectors in India.
Company generated strong revenue and margin growth in the last 3 years.
Its issue price is fully priced.
Considering all these positive factors and negative factors indicated above, investors can subscribe to this IPO for medium to long term perspective. Investors may or may not get listing gains.
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TMB IPO – FAQs
What are Tamilnad Mercantile Bank IPO dates?
The IPO would open for subscription on 5th September, 2022 and closes on 7th September, 2022.
What is Tamilnad Mercantile Bank IPO Price?
The IPO Price band is Rs 500 to Rs 525 per share.
What is Tamilnad Mercantile Bank IPO Lot Size?
The IPO Lot size is 28 shares and in multiple of 28 shares each.
What is Tamilnad Mercantile Bank IPO grey market premium (GMP) today?
While the shares are not actively trading, the GMP is between Rs 45 to Rs 50 per share based on various experts who are tracking this. Here are the details tracked by IPO experts. As per Chanakyanipothi - Nil As per IPOBazar – Rs 45 to 50 As per IPOWatch - Nil As per IPOCentral - Nil As per IPOWala - Nil
Is it good or bad to invest in Tamilnad Mercantile Bank IPO?
Company has good revenue growth in the last 3 years. It shown significant improvement in margins for this period. Its issue price is fully priced. Investors can consider investing in such IPOs.
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You should have advised on p/b Not p/e as is case for banks.
There are various ways to assess the valuation. Since P/E ratio is used majorly I have used it. But I take your point too.
Sir, Do you have any membership plan for private investors. If so, what is the payment structure for it ?
I don’t offer membership services as of onw. Whatever I analyse for own investments and for readers, I keep posting on this blog.
Nicely analysis, as usual Suresh ji. Thank you