Private sector lender Tamilnad Mercantile Bank opened at a minor discount of 2.94 percent to issue price on September 15, following lower-than-expected subscription to its initial public offer (IPO).
The stock listed at Rs 510 on the BSE, and the opening tick on the NSE was Rs 495 against issue price of Rs 510 per share.
The maiden public issue had seen a 2.86 times subscription during September 5-7, with qualified institutional investors buying shares 1.62 times the allotted quota, non-institutional investors 2.94 times and retail investors 6.48 times.
The bank has mobilised Rs 831.6 crore through its initial public offering which was a fresh issue. Hence, the funds will be utilised for augmenting tier-I capital base to meet future capital requirements.
The price band for the offer was Rs 500-525 per share.
The IPO has received a subscribe rating from the brokerages, given the strong financials, improving asset quality with declining non-performing assets and growing deposits.
Tamilnad Mercantile Bank is one of the oldest banks with about 100 years of legacy. TMB focussed on diversifying product portfolio to access more client base. It continues to expand relationship banking facilities to increase network. It intends to focus more on fee-based products such as issuing debit cards, credit cards, insurance, online bill payment, DP services, etc.
"In view of its improving assets quality, lower NPAs, focus on strategic expansion, growing deposit base with a focus on low-cost retail CASA, strong financial track record and valuation comfort, we recommend a ‘subscribe’ to the issue," Reliance Securities said.
Bank with its strong presence in Tamil Nadu & focus to increase presence in other strategic regions is consistently growing deposit base with focus on low-cost retail CASA. Also, with its strong asset quality, underwriting practices and risk management policies and procedures and consistent financial performance, Hem Securities had recommended a subscribe for long term rating on the issue.
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