Tamilnad Mercantile Bank IPO subscribed 2.84 times on last day of bidding process

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Tamilnad Mercantile Bank IPO subscribed 2.84 times on last day of bidding process


The initial public offer (IPO) by Tamilnad Mercantile Bank (TMB) was subscribed 2.84 times on the third and final day of the bidding process on Wednesday.

The issue attracted bids for 2,47,15,544 shares or 2.84 times against the issue size of 87,12,000 shares. The quota reserved for retail individual investors (RIIs) was subscribed 6.36 times, qualified institutional buyers by 1.62 times and NII 2.93 times.

The IPO consisted of the fresh issue of 1,58,40,000 shares, sold in the Rs 500-525 price band. The professionally-managed private lender allotted 71,28,000 equity shares to 10 anchor investors on Friday, raising Rs 363.53 crore at Rs 510 apiece.

Most analysts said the asking valuations were attractive compared to peers, but the bank’s future growth would be subject to pending legal actions. Some of them had a subscribe rating on the issue with a long-term view.

Securities initiated coverage on this bank with a ‘subscribe’ rating and a base case target of Rs 843.60, 1.5 times FY25 book value, representing a potential upside of 60.7 per cent over the next 24 months.

In its bull case scenario, the brokerage assumed FY25 gross advances for the bank at Rs 52,106.9 crore in FY25 (CAGR of 15.3 per cent over FY22-25) and NIMs of 4.2 per cent (up 40 bps over FY22). In its bear case scenario, it has assumed FY25 gross advances of Rs 44,388.2 crore in FY25, up 9.3 per cent. It sees NIMs of 3.4 per cent, down 42 bps over FY22, in the bear case scenario. The price targets for bull and bear scenarios stand at Rs 965.70 share and Rs 511.30, respectively.

said: TMB is one of the oldest and leading private sectors in India, and in the last three years, the bank delivered strong revenue growth and margin expansion. Due to RBI’s direction for listing, its branch expansion plan was put on hold, but once it gets listed, it will expand its network, it said.

“TMB can be a good investment avenue owing to its better growth probability, healthy asset quality, and robust risk management system. It is equipped with basic retail banking infrastructure and a sizable market to grow. However, pending legal matters may impact TMB if the verdict goes against the bank. At the upper price band of Rs 525, the stock is priced at 1.35 times its FY22 book value. We recommend subscribing to the issue from a long-term perspective,” it said



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