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The Street is ready for its third IPO within 3 weeks — here's what you can do

The Street is ready for its third IPO within 3 weeks — here's what you can do

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By CNBCTV18.com Sept 5, 2022 8:53:44 AM IST (Updated)

Tamilnad Mercantile Bank IPO: The TMB IPO will hit the Street on September 5, and close on September 7. Potential investors will be able to bid for Tamilnad Mercantile shares in a price range of Rs 500-525 apiece in multiples of 28.

Tamilnad Mercantile Bank (TMB) — one of the country's oldest private sector lenders —  is gearing up to launch an initial public offering (IPO) worth up to Rs 832 crore on September 5.

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This will be the third initial share sale to hit the Street within a span of three weeks, following a lull of almost three months.
The IPOs of Syrma SGS Technology and DreamFolks Services received a robust response from investors, winning bids for 32.6 times and 56.7 times the shares on offer.
Tamilnad Mercantile Bank has set a price band of Rs 500-525 per share for the IPO, which is an entirely fresh issuance of shares — which means the proceeds will go to the company.
Potential investors will be able to bid for Tamilnad Mercantile shares in multiples of 28, which makes one lot worth Rs 14,000-14,700.
Should you bid for the IPO?
Yes Securities has assigned a 'subscribe' rating on the Tamilnad Mercantile Bank, citing:
  • TMB's asset quality outcomes, which have reached a stage that can be regarded as stable and benign
  • A reasonable loan growth performance as well as outlook
  • Reasonable operating expense control outcomes
  • A healthy net interest margin outcome despite a relatively higher cost of deposits
  • Investmentz suggests subscribing to the issue from a long-term perspective.
    "TMB can be a good investment avenue owing to its better growth with healthy asset quality, robust risk management system, equipped with basic retail banking infrastructure, and sizeable market to grow. However, pending legal matters may impact TMB if the verdict goes against the bank," the brokerage said.
    Ajcon Global recommends subscribing to the issue due to the lender's strong legacy, loyal customer base, focus on improving servicing framework, a strong presence in Tamil Nadu, and consistently growing deposit base.
    At the upper end of the price range, the Tamilnad Mercantile IPO is valued
    at 1.35 times its post-IPO book value, which is decent given its strong fundamentals, the brokerage said.
    Profitability
    Tamilnad Mercantile Bank's net profit has grown at a CAGR of almost 42 percent between the years ended March 2020 and March 2022, according to Axis Securities. Its deposits increased at a CAGR of 10.5 percent compared with a peer median of 7.9 percent during this period, and advances rose 9.9 percent, the brokerage highlighted in a note.
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