Those who have invested in private sector lender Tamilnad Mercantile Bank through its IPO are eagerly awaiting the listing of its shares, which is going to take place on September 15.
The debut price could be either flat or moderate premium over the final issue price of Rs 510 given the lower-than-expected investors' response to its public issue, experts told Moneycontrol.
The Rs 831.6-crore public issue was entirely a fresh issue by the company and the funds will be utilised for augmenting the tier-I capital base to meet future capital requirements.
The offer was subscribed 2.86 times during September 5-7, with retail investors buying shares 6.48 times the allotted quota, non-institutional investors 2.94 times and qualified institutional investors 1.62 times.
"We expect the shares to list at par or with a marginally small premium, given the low response from investors," Narendra Solanki, Head- Equity Research at Anand Rathi Shares & Stock Brokers said.
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Astha Jain, Senior Research Analyst at Hem Securities and Aayush Agrawal, Senior Research Analyst at Swastika Investmart are also expecting a flat listing on Tamilnad Mercantile Bank.
The lower premium in the grey market may also impact the listing performance, experts said.
According to them, Tamilnad Mercantile Bank shares traded at around 2.5-3 percent premium in the grey market over the issue price. Investors generally look at the grey market to get a hint about the listing price of any IPO, though it is an unofficial platform.
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Tamilnad Mercantile Bank is one of the oldest and leading private sector banks in India with a history of almost 100 years. It has 509 branches across India as of March 2022.
The bank has seen consistent growth in net interest margin over the years, expanding from 3.64 percent in FY20 to 4.10 percent in FY22, with a reduction in cost to income percentage from 46.10 percent to 42.12 percent during the same period.
It had the second highest net profit for FY22 amongst its peers, growing at a CAGR of 42 percent during FY20-FY22, with return on equity and return on assets growing at a CAGR of 24.31 percent and 29.49 percent respectively in the same period.
The bank had recorded gross non-performing assets at 1.69 percent in FY22, down from 3.62 percent in FY20. Its net non-performing assets have reduced from 1.80 percent to 0.95 percent in the same period.
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