On day three, the retail component of the Tamilnad Mercantile Bank IPO was subscribed 1.53 times

On September 7, the final day of bidding, the public offering of Tamilnad Mercantile Bank received a respectable response, being subscribed 1.53 times.

According to information accessible with exchanges, investors purchased 1.33 crore shares against the size of the offer, which was 87.12 lakh shares.

While sections reserved for non-institutional investors and qualified institutional investors were subscribed 1.27 times and 98% respectively, retail investors maintained their lead by booking their quota 3.61 times.

At the upper end of the pricing range of Rs. 500-525 a share, the private sector lender plans to raise Rs. 831.60 crore. Since this is a completely new offering, the bank will use the funds to increase its Tier One Capital Base in order to fulfil future capital needs.

Tamilnad Mercantile Bank is one of the oldest private sector banks in India. The company has produced significant sales growth and profit expansion during the last three years. Branch expansion plans were put on hold as a result of central bank listing directives, although the network will be expanded after listing.

According to Asit C. Mehta Investment Intermediates, "The lender can be a solid investment avenue owing to its higher growth with healthy asset quality, effective risk management system, equipped with basic retail banking infrastructure, and significant market to grow."

However, if the judge rules against the lender, it can have an effect on the bank's ongoing legal proceedings. According to the brokerage, who advised subscribers to subscribe to the issue from a long-term perspective, the company is valued at 1.35x its FY22 book value (based on fully diluted post issue equity) at the top end of the pricing range.

Given the lender's consistent performance and favourable return ratio, Anand Rathi Research also advised giving this issue a "subscribe-long term" grade.

According to the brokerage, Tamilnad Mercantile Bank is asking for a somewhat higher value than its competitors considering that it is exceeding them on most financial metrics.

Tamilnad Mercantile Bank is focused on expanding its business outside of Tamil Nadu, where it already has a significant presence. The lender concentrates on lending to the agricultural, retail, and MSME sectors, all of which have shown growth between FY20 and FY22 of a compound annual rate of 12.94 percent.

From FY20 to FY22, the net interest margin increased at a compound annual rate of 6.13 percent, from 3.64 to 4.10 percent.