Business strategy

Tamilnad Mercantile Bank Shares Lists At 3% Discount to IPO Price; Should You Buy, Sell or Hold?

Tamilnad Mercantile Bank IPO Listing: Tamilnad Mercantile Bank shares made its D-street debut today. Shares of the company got listed at Rs 495 on NSE, a discount of 3 per cent against its issue price of Rs 510 per share. Meanwhile, its shares were listed at par on BSE. At the time of listing, the company had a market capitalisation of Rs 8,075.92 crore. The company launched its Rs 831-crore initial public offering (IPO) from September 5-7, 2022.

The initial public offer (IPO) of Tamilnad Mercantile Bank got subscribed 2.86 times on the last day of subscription. The Rs 831.6-crore public offer received bids for 2,49,39,292 shares against 87,12,000 shares on offer.

Tamilnad Mercantile Bank IPO’s Subscription

Tamilnad Mercantile Bank IPO’s qualified institutional buyers (QIBs) category was subscribed 1.62 times. The Non-Institutional Investors (NIIs) category was subscribed 2.94 times. The Retail Individual Investors (RIIs) category was subscribed 6.48 times.

Tamilnad Mercantile Bank IPO Valuation

Anand Rathi Shares & Stock Brokers had recommended a “subscribe-long term” rating to the IPO because of its consistency in performance and the healthy return ratio. Its Head (Equity Research) Narendra Solanki said Tamilnad Mercantile Bank, at the current valuation, is seen demanding a richer valuation compared to its peers given that TMB is outperforming its peers on the majority of financial parameters.

About Tamilnad Mercantile Bank

Tamilnad Mercantile Bank is an over 100-year-old private sector bank headquartered at Thoothukudi, Tamil Nadu. The bank has a network of 509 branches, 12 administrative offices, 1,141 ATMs, 282 cash recycler machines (CRMs), and 101 E-lobbies. Out of these 509 branches, 76 branches are in metropolitan areas, 80 branches are in urban areas, 247 branches are in semi-urban areas, and 106 branches are in rural areas. The bank has a wide presence in South India and further diversifying branches in other states of India, with 90 branches located in the states of Maharashtra, Gujarat, Karnataka and Andhra Pradesh, respectively.

What Should Investors Do Now?

Santosh Meena, Head of Research, Swastika Investmart Ltd., said: “Tamilnad Mercantile Bank has debuted at Rs. 495 i.e. 6 per cent below its issue price.  The precarious legal challenges, the lack of complete clarity on the management’s long-term performance, and less than stellar subscription numbers are some of the reasons for its negative listing. Those who applied for listing gains can maintain a stop loss of Rs. 470. Long-term investors should wait for some quarters to let the dust settle, and in the meanwhile, we suggest investors go for the existing listed banks where the management’s track record and performance during multiple credit cycles are visible. In short, large-sized banks and a few mid-sized banks are the best to ride on the upcoming credit and economic growth cycle.”

Disclaimer: The views and investment tips by experts in this News18.com report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.

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