Tamilnad Mercantile Bank IPO is subscribed 1.53% on day 2, grey market premiums fall

• The IPO of the private sector bank has been subscribed 1.53 times so far in the first two days.
• The private sector bank plans to raise ₹832 crore through a fresh issue of 1.58 crore shares.
• The lender has fixed the price band at ₹500-525 per share.
• The grey market premium of the company’s shares have come down to ₹15 from ₹35 earlier.

The initial public offering of Thoothukudi-based Tamilnad Mercantile Bank has been subscribed 1.53 times on the second day

The IPO has received good demand from retail investors as this portion was subscribed by 3.61 times.

The private sector bank is planning to raise ₹832 crore through a fresh issue of 1.58 crore shares. The lender has fixed the price band at ₹500-525 per share.

The proceeds from the IPO will be used to augment tier-I capital base to meet future capital requirements.

Category of investors	Subscription status
Qualified institutional buyers	0.98 times
Non institutional investors	1.27 times
Retail	3.61 times
Overall	1.53 times

As of March 31, 2022, the lender has 509 branches, of which 106 branches are in rural, 247 in semi-urban, 80 in urban and 76 in metropolitan centres. Its advances portfolio primarily consists of retail customers, agricultural customers and MSMEs.

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

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

The grey market premium of the company’s shares have come down to ₹15 from ₹35 earlier.

GMP is the premium at which IPO shares are traded in an unofficial market before they are listed on the stock exchanges. The IPO opened on September 5, and will close on September 7.

Analysts have recommended subscribing to the IPO following the bank’s consistent performance over the years.

“TMB is demanding a slightly higher valuation when compared to its peers given that TMB is outperforming its peers in the majority of financial parameters. Given the consistency in its performance over past periods and healthy return ratio, we recommend a Subscribe-Long Term,” said a report by Anand Rathi.


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