Tamilnad Mercantile Bank makes quiet debut; falls 5% post listing

Tamilnad Mercantile Bank, one of the oldest private sector banks in India, has made a quiet debut on the bourses by listing at ₹510, on par with its issue price on the Bombay Stock Exchange (BSE). On the National Stock Exchange (NSE), the stock opened at ₹495 per share, nearly 3% lower than the issue price of ₹510, in line with the low response to the public offer.  

Post listing, Tamilnad Mercantile Bank's share price rose as much as 1.8% to hit an intraday high of ₹519, while it dropped 5% against the issue price to touch a low of ₹484.5 on the BSE. At 12:25 PM, the stock was trading 0.4% higher at ₹512, while market capitalisation stood at ₹8,107.6 crore. On the volume front, 2.13 lakh shares worth ₹10.75 crore changed hands over the counter on the BSE at the time of reporting.

The muted listing of Tamilnad Mercantile Bank was in line with market expectations as the initial public offering (IPO) of the private bank received a tepid response from investors. The ₹831.6-crore IPO was subscribed 2.86 times on the last day of subscription (September 7) as it received bids for 2,49,39,292 shares against 87,12,000 stocks on offer. The quota reserved for retail investors was subscribed 6.48 times, while the portion set aside for non-institutional investors was booked 2.94 times. The category for qualified institutional buyers (QIBs) received 1.62 times bid.

The lender had fixed a price band of ₹500-525 apiece for the IPO, which opened for subscription between September 5-7. The lot size was 28 equity shares and in multiples thereafter, which means retail investors had to apply for a minimum of ₹14,700 and a maximum of ₹1,91,100 in the issue.

The bank, which provides banking and financial services to retail customers, micro, small, and medium enterprises (MSMEs), intends to use IPO proceeds to augment its tier-I capital base to meet future capital requirements as well as to meet offer issue expenses. The private sector lender also expects to receive benefits from listing the shares on the stock exchanges.

Established in 1921, Tamilnad Mercantile Bank (TMB) is one of the oldest private sector banks in India with a history of more than 100 years. It is a professionally managed bank and does not have any identifiable promoters. As of March 31, 2022, the Thoothukudi-headquartered bank has a total branch network of 509 and a total customer base of 5.08 million. The lender has a significant market presence in Tamil Nadu with 369 branches, while it is also present in 15 other states and 4 union territories of India.

For the financial year ended March 31, 2022, the bank reported a profit after tax (PAT) of ₹901.9 crore as compared to ₹654.04 crore in the previous fiscal and ₹464.89 crore in FY20. The total revenue increased to ₹4,656.44 crore, from ₹4,253.4 in FY21 and ₹3,992.53 crore in FY20.