Tamil Nadu Mercantile Bank IPO subscribed 2.86 times on the last day of subscription

The non-institutional investor (NII) allocation was subscribed 2.94 times as compared to 6.48 times for retail individual investors. People in the Qualified Institutional Buyers (QIB) category subscribed 1.62 times. Fresh offer of 1,58,40,000 shares, priced in the range of from 500 525, made the IPO. Tamil Nadu Mercantile Bank (TMB) raised 363.53 crore on Friday by issuing 71,28,000 equity shares to 10 anchor investors at a price range of Rs 500-525.

“TMB can be a good avenue of investment due to healthy asset quality, strong risk management system, equipped with basic retail banking infrastructure and better growth with large market to grow. In terms of valuation, at higher price bands, TMB seeks a P/B multiplier of 1.35x on a fully diluted BV basis after FY 2012. On all parameters except the pending legal case, the issue looks attractively valuable and holds good future prospects Therefore, it is recommended to “subscribe” to the issue from a long-term perspective, commented research analysts at broking firm Ashika Research.

“The bank is bringing the issue to the price band,” said research analysts at broking firm Hem Securities. 500-525 per share at a p/b multiplier of 1.40x on FY22 PAT basis. Though the bank has a strong legacy, loyal customer base and has focused on improving its servicing infrastructure. The Bank with its strong presence in Tamil Nadu and other strategic sectors is focusing on expanding its deposit base with focus on low cost retail CASAs. Furthermore, with its strong asset quality, underwriting practices and risk management policies and procedures and consistent financial performance, we recommend “Subscribe” to this issue for the long term.

The views and recommendations given above are those of individual analysts or broking companies and not of Mint.

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