Tamilnad Mercantile Bank IPO subscribed 2.85 times on last day of issue

• The retail portion of the IPO saw a subscription of 6.41 times.
• 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 had come down to ₹15 from ₹35 earlier.

The initial public offering (IPO) of Thoothukudi-based Tamilnad Mercantile Bank was subscribed 2.85 times on Wednesday, the last day of the issue.

Overall, the IPO has seen decent demand from investors amidst volatile market conditions and even as the grey market premium for the company’s shares have been falling. Despite this, the retail portion of the IPO saw a subscription of 6.41 times the offer.

The grey market premium (GMP) 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 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 and to meet future capital requirements. The IPO opened on September 5.

Category of investors	Subscription status
Qualified institutional buyers	1.62 times
Non institutional investors	2.94 times
Retail	6.41 times
Overall	2.85 times

Analysts had 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.

As of March 31, 2022, the lender had 509 branches – 106 rural branches, 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 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.

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