Thoothukudi-based Tamilnad Mercantile Bank is listed at ₹510 on the bourses today, up from its IPO price of ₹500. The entry premium of ₹10 is lower than what the gray market predicted.
The gray market IPO premium has been falling since its opening. As of yesterday, it was ₹15. It was fixed at ₹35 when the IPO opened.
The company’s market capitalization stands at ₹ 8,075 crore, according to BSE data.
Analysts predicted a tepid listing of the company’s shares.
“We expect a stagnant or negative quote based on the current GMP or ₹ 12, i.e. 2.5% above the issue price and less than stellar underwriting numbers. We have assigned an avoid rating due to uncertain legal challenges and lack of full clarity on management’s long-term performance despite improving fundamentals over the past three years,” Aayush Agrawal, Principal Research Analyst at Swastika Investmart.
The IPO was subscribed 2.86 times under volatile market conditions. The retail portion of the IPO saw a subscription of 6.48 times the offer.
The proceeds from the IPO will be used to expand the Tier-I capital base to meet future capital requirements.
As of March 31, 2022, the lender has 509 branches, of which 106 are located in rural areas, 247 in semi-urban areas, 80 in cities and 76 in metropolitan centers. Its portfolio of advances consists primarily of retail customers, agricultural customers and small and medium-sized enterprises.
The bank has built a strong network of customers in the state of Tamil Nadu. As on 31 March 2022, Tamil Nadu contributed 75% of its deposits and advances.
In addition, the bank’s profitability has almost doubled over the last three financial years.
| Details | Revenues | Profit |
| FY22 | ₹4,656 crore | ₹901 crore |
| FY21 | ₹4,253 crore | ₹654 crore |
| FY20 | ₹3,992 crore | ₹464 crore |
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