Should you buy Tamilnad Mercantile Bank stock before it goes public?

Tamilnad Mercantile Bank
Should you buy Tamilnad Mercantile Bank stock before it goes public? (Image Source: MoneyControl Hindi)

The first public offering of Tamilnad Mercantile Bank will begin on Monday, September 5. The bank hopes to collect up to Rs 825 crore through its initial share offering. Meanwhile, the bank said on Sunday that senior banker Krishnan Sankarasubramaniam has taken over as managing director and CEO with immediate effect. The business said on Friday that it has raised a little more than Rs 363 crore from anchor investors in advance of its IPO. According to a circular posted on the BSE website, it has opted to distribute 71.28 lakh equity shares to anchor investors at Rs 510 each, bringing the total transaction amount to Rs 363.5 crore.

Subscription Deadline for Tamilnad Mercantile Bank’s Initial Public Offering

The IPO subscription period for Thoothukudi-based Tamilnad Mercantile Bank will be extended from September 5 to September 7. The IPO proceeds will be utilized to supplement the tier-I capital base in order to satisfy future capital requirements.

The IPO of Tamilnad Mercantile Bank

Tamilnad Mercantile Bank (TMB), founded in 1921, is one of India’s oldest private sector banks. It provides a wide range of banking and financial services to individual consumers, as well as micro, small, and medium companies (MSMEs) and others. TMB has a robust portfolio of advances and deposits from a diverse client base that includes retail, agricultural, and MSMEs.

The bank has a robust branch network of 509 branches and a total client base of 5.08 million as of March 31, 2022. TMB has a strong market presence in Tamil Nadu, with 369 branches, and is also present in 15 other Indian states and four union territories.

The Issue’s Objects

The net proceeds of the offering will be used for the following purposes:

  • To supplement the tier-I capital base in order to satisfy future capital needs.
  • Meet offer issue costs.
  • To reap the benefits of having the shares listed on stock markets.

Price Band for Tamilnad Mercantile Bank Initial Public Offering

Tamilnad Mercantile Bank has established a price range of Rs 500-525 per share for the IPO, which is a whole new issuance of shares — meaning the money would go to the firm.

Reserved Portions in the Tamilnad Mercantile Bank Initial Public Offering

The book-running lead managers are Axis Capital, Motilal Oswal Investment Advisors, and SBI Capital Markets, and the registrant is Link Intime India Private Ltd. The issuance has been divided into three parts: 75% for qualified institutional investors, 15% for non-institutional investors, and 10% for regular investors.

Tamilnad Mercantile Bank IPO: About

With a nearly 100-year existence, the bank is one of India’s oldest sector banks. On May 11, 1921, it was founded as Nadar Bank Limited, and in 1962, it was renamed Tamilnad Mercantile Bank Limited.

It provides a wide range of services primarily to micro, small, and medium-sized businesses, as well as agricultural and retail consumers. The bank has 509 branches, 369 of which are in its native state of Tamil Nadu, which accounts for more than 70% of its activity, while the remaining branches are scattered across 15 states and four Union territories.

Should you Invest?

“The fragile legal difficulties and the lack of total transparency on the management’s long-term performance make us apprehensive about this issue,” stated Aayush Agrawal, Senior Research Analyst, Swastika Investmart Ltd. It is important to note that management quality is critical for any banking or finance company because it is synonymous with betting on the jockey rather than the horse; thus, we recommend that investors look for existing listed banks where the management’s track record and performance across multiple credit cycles are visible. In short, major banks and a few mid-sized banks are best positioned to benefit from the impending credit and economic development cycle.”

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