Tamilnad Mercantile Bank IPO Fully Subscribed On Day 2
The Initial Public Offer (IPO) of Tamilnad Mercantile Bank saw a tremendous response on the second day of subscription. The offer was subscribed 1.22 times against the bids received amounting to 92.09 lakh shares for IPO size of 87.12 lakh shares.
In terms of subscription, retail individual investors (RII) maintained the lead, booking their quota 2.37 times, while non-institutional investors bought 84 per cent of their reserved portion.
Qualified institutional investors also showed good responses with their portion getting subscribed 73 per cent.
After the anchor book received a healthy response, the issue size of 1.58 crore shares was reduced to 87.12 lakh shares. The company has already raised Rs 363 crore out of Rs 831.60 crore, from the anchor book on 2 September and looks forward to raising the remaining through its public issue.
To meet future capital requirements, the firm will utilise the proceeds of the issue to augment its tier 1 capital base.
The price band for the offer has been fixed at Rs 500-525 per share which will close on 7 September.
Tamilnad Mercantile Bank is India’s one of the oldest consistent financial performance private sector banks having healthy asset quality.
However, the brokerage feels pending legal proceedings relating to shareholding and a change in management still remain a risk. Hence, the bank has assigned a subscribe-only rating for the IPO in the long term.
Tamilnad Mercantile Bank attained 42 per cent compound annual growth rate in profit and on the other hand revenue grew at 17 per cent CAGR during FY20-FY22.
RAM segment (retail, agriculture and MSME) has always been the primary focus of lenders and the segment accounted for around 88 per cent of total advances as of March 2022. With 369 branches and 949 ATMs as of March 2022, it has built a strong presence in Tamil Nadu.
The lender has 247 branches in semi-urban, 106 in rural, 76 in metro and 80 branches in urban areas making a count of 509 branches in total.
