Tamilnad Mercantile Bank
Mainboard₹808 Cr issue
0.00%
Listing gain over issue price
Issue size
₹808 Cr
1 lot at cut-off
₹14,280
Lot size
28shares
Open
05 Sep 2022
Close
07 Sep 2022
Allotment
12 Sep 2022
Listing
15 Sep 2022
Listing performance
Issue price
₹510
Listed at
₹510
Listing-day close
₹509.65
Latest price
₹800.65
Close on 23 Oct 2026
Listing gain
0.00%
Return since issue
+56.99%
Scheduled dates
Tentative timetable — a past date is not confirmation the step completed
Issue details
- IPO date
- 05 Sep 2022 – 07 Sep 2022
- Listing date
- 15 Sep 2022
- Face value
- ₹10 per share
- Issue price
- ₹510 per share
- Lot size
- 28 shares
- Total issue size
- ₹808 Cr
- Market cap at offer price
- ₹8,313 Cr
- ISIN
- INE668A01016
- Registrar
- MUFG Intime India Pvt.Ltd.
- Lead managers
- Axis Capital Ltd.
- Registered office
- No.57, Victoria Extension Road, Thoothukudi, Tamil Nadu
Reservation and application size
How the issue is split between investor categories, and what each may bid
| Investor category | Shares | % of net | % of total |
|---|---|---|---|
| Anchor investor · within QIB | 71,28,000 | — | — |
Application size
Minimum 28 shares per lot, in multiples, at ₹510
| Application | Lots | Shares | Amount |
|---|---|---|---|
| Retail (min) | 1 | 28 | ₹14,280 |
| Retail (max) | 14 | 392 | ₹1,99,920 |
| S-HNI (min) | 15 | 420 | ₹2,14,200 |
| S-HNI (max) | 70 | 1,960 | ₹9,99,600 |
| B-HNI (min) | 71 | 1,988 | ₹10,13,880 |
Category limits
| Category | Bid size | Cut-off |
|---|---|---|
| Retail (RII) | Up to ₹2 lakh | Yes |
| Small HNI (sNII) | ₹2 lakh – ₹10 lakh | No |
| Big HNI (bNII) | Above ₹10 lakh | No |
| Employee | Up to ₹5 lakh | Yes |
Bidding at cut-off means accepting the final issue price without naming one. Only retail and employee applicants may do so.
Anchor investors
Institutional allocation placed a day before the issue opens, carved out of the QIB portion and locked in after listing.
Shares allocated
71,28,000
Anchor portion
₹364 Cr
at ₹510 per share
Valuation and performance
Valuation at offer price
₹510 per share
| Metric | Pre-issue | Post-issue |
|---|---|---|
| EPS (₹) | 57.67 | — |
| P/E (×) | 8.84 | — |
| Market cap | — | ₹8,313 Cr |
Key performance indicators
Latest reported period
- Return on net worth
- 15.40%
- PAT margin
- 17.65%
- NAV per share
- ₹374.41
Single period as reported. Year-on-year movement is in the financials table below, where every period is published.
About Tamilnad Mercantile Bank
Tamilnad Mercantile Bank Limited was incorporated on May 11, 1921 as 'Nadar Bank Limited' in Thoothukudi, Tamil Nadu and commenced business on November 11, 1921. The bank was renamed 'Tamilnad Mercantile Bank Limited' effective November 27, 1962. As of March 31, 2022, the bank operates 509 branches (106 rural, 247 semi-urban, 80 urban, 76 metropolitan) and serves approximately 5.08 million customers, of which 79.78% have been associated with the bank for over five years. The bank offers a wide range of banking and financial services with a strong focus on retail, MSME and agricultural financing, which represented 88.14% of net advances as of March 31, 2022. The bank has a history of almost 100 years and is one of the leading old private sector banks in India.
Company Analysis
from RHPTamilnad Mercantile Bank is one of India's oldest private sector banks offering banking and financial services primarily to micro, small and medium enterprises, agricultural and retail customers across southern India.
Tamilnad Mercantile Bank Limited was incorporated on May 11, 1921 as 'Nadar Bank Limited' in Thoothukudi, Tamil Nadu and commenced business on November 11, 1921. The bank was renamed 'Tamilnad Mercantile Bank Limited' effective November 27, 1962. As of March 31, 2022, the bank operates 509 branches (106 rural, 247 semi-urban, 80 urban, 76 metropolitan) and serves approximately 5.08 million customers, of which 79.78% have been associated with the bank for over five years. The bank offers a wide range of banking and financial services with a strong focus on retail, MSME and agricultural financing, which represented 88.14% of net advances as of March 31, 2022. The bank has a history of almost 100 years and is one of the leading old private sector banks in India.
Banking and Financial ServicesRetail BankingMSME FinancingAgricultural Financing
Objects of the Issue
- Augmenting our Bank's Tier-I capital base to meet its future capital requirements ₹7,650.14 million p.15
- Augmentation of Tier-I capital base to meet future capital requirements arising from growth in assets (loans/advances and investment portfolio) and to ensure compliance with regulatory capital adequacy requirements prescribed by RBI ₹7,650.14 million (Net Proceeds) p.85
- Meeting Offer expenses including fees payable to Book Running Lead Managers, legal counsels, advisors, SEBI and Stock Exchange fees, brokerage, underwriting commission, printing, advertising and other incidental expenses ₹428.26 million (estimated) p.85
- Capital raising for general corporate purposes including funding of advances and investments p.326
Issue Structure
- Total Issue
- ₹8,078.40 million (subject to finalisation of the Basis of Allotment)
- Fresh Issue
- 15,840,000 Equity Shares aggregating to ₹8,078.40 million
- Price Band
- ₹500 to ₹525 per Equity Share (Floor Price and Cap Price)
- Lot Size
- 28 Equity Shares and in multiples of 28 Equity Shares thereafter (Bid Lot)
- Face Value
- ₹10 per Equity Share
Business Model
The bank generates revenue primarily through interest income on advances and deposits, and fee-based income from banking services. As of March 31, 2022, fee-based income was ₹1,859.70 million, representing 3.99% of total income of ₹46,564.35 million. The bank's lending products focus on retail, MSME and agricultural customers, with this portfolio (RAM) increasing at a CAGR of 12.94% over three fiscals from ₹231,427.36 million in Fiscal 2020 to ₹295,205.01 million in Fiscal 2022.
Business Segments
Provides retail asset products including home loans, personal loans, auto loans, educational loans, business loans and security-backed loans; MSME loans to manufacturing, traders and services sectors; loans to individual farmers, groups of farmers, agriculture businesses and agriculture corporates
Provides various loans to corporates, particularly in textiles and other industries, including working capital, term financial, trade financial, structured finance services, and foreign exchange business funding in domestic and foreign currencies
Provides traditional banking services including loans, advances, deposits, and investments to retail, agricultural, MSME, and corporate customers
Provides loans of small amounts to low income individuals and groups, including loans up to ₹10,000 under PM Svanidhi scheme repayable in monthly instalments
Provides various loan products to MSME customers operating in manufacturing, trading and services sector, including working capital and term loans with ticket sizes ranging from ₹10 million to ₹50 million
Provides loan products to individual farmers, group of farmers and agricultural corporates including short term crop loans and loans for machinery purchases
Provides home loans, personal loans, auto loans, educational loans and security backed loans to retail customers
Provides various kinds of loans to corporates in textiles and other industries with working capital, term finance, trade finance and structured finance services
Offers various deposit products including savings bank accounts, current accounts, fixed deposits, recurring deposits, and tax-saving deposits
Retail lending and deposits for individuals and small customers
Small and medium enterprise lending
Agricultural lending
Wholesale/Corporate lending
Managing government securities, other approved securities, shares, debentures and bonds. Includes management of investments portfolio classified as Held to Maturity, Available for Sale, and Held for Trading as per RBI guidelines.
Providing various kinds of loans to corporates, working capital, term finance, trade finance, structured finance services, and foreign exchange business funding in domestic and foreign currencies.
Providing home loans, personal loans, auto loans, educational loans, and security backed loans of various types to retail customers. Also includes MSME and agricultural lending.
Manages funds, maintains statutory reserves (CRR and SLR), manages asset-liability gaps, interest rate risks, liquidity positions, investments and trading activities in equity and forex instruments
Provides corporate and wholesale banking services
Provides retail banking operations and services
Operates physical bank branches across multiple regions for customer service delivery
Operates ATM networks for cash withdrawal and basic banking services
SWOT Analysis
Strengths
- • One of the oldest and leading old private sector banks with ~100-year history(p.15)
- • Extensive branch network with strong regional customer base(p.15)
- • Professionally managed bank without identifiable promoter(p.2)
- • Strong capital adequacy ratio(p.39)
- • Improving asset quality with declining NPA ratio(p.45)
- • Diversified revenue base across traditional banking and micro banking segments(p.46)
- • Strong priority sector lending portfolio with 77.20% of ANBC(p.46)
- • Improved net interest margin over three years(p.47)
- • Strong capital adequacy position(p.81)
- • Consistent profitability with growing net profit(p.66)
- • Strong legacy and brand presence with nearly 100 years of history and established reputation as oldest private sector bank(p.117)
- • Large loyal customer base with 79.78% customers retained for over 5 years, contributing 77.93% of deposits and 64.90% of advances(p.117)
- • Strong presence in Tamil Nadu with 75.06% of total business, well-positioned in high-growth state with 11% CAGR GSVA vs 9% national average(p.121)
- • Lowest GNPA of 1.69% among peers (median 4.40%) and strong asset quality with 87.92% provision coverage ratio(p.115)
- • Highest net profit margin (17.70%) and second highest net profit (₹8,219.09 million) among peers in FY22(p.115)
- • Superior ROE of 16.58% vs peer median 8.30% and ROA of 1.66% vs peer median 0.80%(p.115)
- • Strong deposit growth CAGR of 10.46% (FY20-22) exceeding peer median of 7.90%, with increasing CASA ratio of 30.50% in FY22(p.121)
- • Focused RAM portfolio strategy with MSME, agricultural and retail segments representing 88.14% of advances growing at 12.94% CAGR(p.122)
- • Established presence with 509 branches across India(p.113)
- • Improving net interest margin trend(p.200)
- • Strong capital adequacy position(p.200)
- • Significant growth in net profit(p.211)
- • High provision coverage ratio(p.200)
- • Historic banking institution with deep roots(p.161)
- • Almost 100-year history in banking(p.269)
- • Strong deposit growth outpacing peer median(p.269)
- • Low Gross NPA ratio versus peers(p.271)
- • High Return on Assets versus peer median(p.269)
- • Long-standing customer relationships with 79.78% customer retention(p.269)
- • Strong CASA growth at 20% CAGR(p.271)
- • Conservative provisioning policy for asset quality management(p.282)
- • Healthy capital adequacy ratio well above regulatory minimum(p.291)
- • Growing advances portfolio driven by priority sector lending(p.288)
- • Improved profitability with net profit growth of 36% YoY(p.283)
- • Deposit base growing with strong CASA composition(p.290)
- • Diversified deposit base with low concentration risk(p.294)
Weaknesses
- • 37.73% of paid-up capital subject to outstanding legal proceedings involving regulatory penalties(p.20)
- • Contingent liabilities exceed net worth(p.33)
- • High dependency on key managerial personnel(p.41)
- • Exposure to operational risks including fraud and employee misconduct(p.23)
- • Multiple anonymous whistleblower complaints received affecting reputation(p.30)
- • Restriction on opening new branches pending listing completion(p.40)
- • Negative cash flows in past periods(p.38)
- • 39.07% of paid-up capital not available for trading post-listing(p.26)
- • Heavy dependence on priority sector lending with regulatory compliance risk(p.46)
- • High concentration of trade union membership among employees(p.51)
- • Unable to trace significant historical corporate records and filings(p.52)
- • Past cyber security incidents and regulatory penalties(p.51)
- • Gross non-performing assets of 1.69% exceeding sector average(p.91)
- • Significant equity shares held in abeyance and subject to litigation(p.20)
- • Heavy concentration in Tamil Nadu with 75.06% of total business creates geographic risk(p.121)
- • Smaller scale compared to peers - total business of ₹786,812.50 million is significantly lower than larger peer banks(p.119)
- • High cost-to-income ratio of 42.12% while better than most peers, indicates room for operational efficiency improvement(p.115)
- • GNPA spiked to 10.14% in FY20 during pandemic, showing vulnerability to economic stress(p.101)
- • Material FEMA penalty exposure and regulatory uncertainty(p.206)
- • Missing historical corporate records(p.161)
- • Significant reliance on concentrated single large borrower(p.194)
- • Geographic concentration of business in Tamil Nadu(p.203)
- • High regional concentration in Tamil Nadu(p.274)
- • Heavy dependence on RAM customer segment(p.273)
- • Significant exposure to MSME sector concentration(p.270)
- • High Deferred Tax Liability burden(p.257)
- • Low operational scale outside Tamil Nadu(p.270)
- • Significant contingent liability from regulatory penalties related to share transfers(p.292)
- • Missing corporate records creating regulatory compliance uncertainty(p.48)
- • High litigation exposure related to disputed share ownership(p.20)
- • Reliance on income from jewel loans subject to concentration(p.283)
- • Litigation-related share blocking(p.404)
- • Regulatory enforcement actions(p.401)
- • Shares in abeyance under statutory provisions(p.404)
Opportunities
- • Expansion into underserved markets with geographic diversification strategy(p.43)
- • Strong growth in RAM (Retail, MSME, Agri) portfolio segments(p.44)
- • Significant under-penetration in Indian banking sector provides growth opportunities(p.15)
- • Private banks gaining market share from public banks with operational efficiency(p.15)
- • Healthy deposit growth trajectory in banking sector(p.15)
- • Significant under-penetration of Indian banking sector with credit-to-GDP at 55%(p.95)
- • Expected credit growth of 10-11% during fiscal 2023(p.97)
- • Strong deposit growth expected at 9-11% during fiscal 2023(p.97)
- • Private banks outpacing public banks with higher credit growth(p.98)
- • Expansion of financial inclusion through government schemes(p.96)
- • Tamil Nadu under-penetrated with bank credit-to-GDP of 52% vs Maharashtra 100% and Gujarat 33%, offering substantial growth potential(p.121)
- • Expansion in high-growth regions: presence in Maharashtra, Gujarat, Karnataka, Andhra Pradesh with growth contributions of 5.78%, 2.91%, 3.47%, 3.67%(p.121)
- • Strong government support for Tamil Nadu including Industrial Policy 2021 targeting 15% annual manufacturing growth rate and investment of ₹10 trillion(p.109)
- • Retail segment growth opportunity with expected 13-15% CAGR (FY23-24) driven by low interest rates and housing demand(p.103)
- • MSME credit growth opportunity with banks allocating 7.5% to micro enterprises under PSL and sector contributing 33.50% to India's GVA but only 14% of banking credit(p.106)
- • Agricultural credit growth with RBI agri-credit target increased to ₹18 trillion in FY23 from ₹16.5 trillion in FY22, and expected 11-13% growth(p.101)
- • Digital banking penetration opportunity with only 0.28 million customers using internet/mobile banking out of 5.08 million total customers(p.120)
- • Growth in priority sector lending, particularly agriculture(p.196)
- • Rapid expansion of digital and mobile banking channels(p.200)
- • UPI transaction growth momentum(p.201)
- • Increasing CASA ratio and retail deposit base(p.191)
- • Expansion of restructured lending post-COVID regulatory support(p.193)
- • Expansion in underpenetrated Tamil Nadu market(p.269)
- • Geographic diversification beyond Tamil Nadu(p.270)
- • MSME lending growth in high-growth sectors(p.269)
- • Digital banking platform expansion(p.276)
- • Agricultural lending growth momentum(p.270)
- • Expansion of investment portfolio in government securities(p.288)
- • Growing priority sector lending portfolio(p.288)
- • Expansion through new E-Lobbies to enhance distribution(p.284)
- • Growth in commission income from various banking services(p.283)
Threats
- • High regional concentration in Tamil Nadu exposes to local economic and political risks(p.30)
- • Stringent regulatory requirements and compliance obligations(p.30)
- • Ongoing RBI supervision with potential for additional regulatory action(p.33)
- • COVID-19 pandemic impacts on business operations and credit quality(p.36)
- • Constraints on voting rights and share acquisition due to banking regulations(p.38)
- • Dependence on accuracy of customer financial information for credit decisions(p.41)
- • Interest rate volatility impacting net interest margin and asset quality(p.47)
- • Intense competition from larger and well-capitalized banks(p.48)
- • Macroeconomic slowdown and inflation headwinds(p.94)
- • Regulatory uncertainty and changing compliance requirements(p.55)
- • Systemic risks in the Indian financial system(p.57)
- • COVID-19 pandemic and similar epidemics causing operational disruptions(p.54)
- • Rising interest rates with RBI expected to increase repo rate 75 bps this fiscal, raising cost of funds and borrower stress(p.108)
- • High competition from larger public and private sector banks with extensive networks and lower cost deposit base(p.140)
- • Agricultural sector vulnerability with GNPA ranging 8.5-9.5% and dependent on monsoon and commodity prices(p.101)
- • MSME sector stress with high credit cost and dependency on economic conditions, showing muted growth in FY21(p.106)
- • Global inflationary pressures affecting MSME margins with inability to pass on price increases limiting profitability(p.107)
- • Regulatory compliance burden and capital adequacy requirements restricting lending capacity and returns(p.134)
- • Regulatory compliance burden on compensation and corporate governance(p.151)
- • Restrictions on ownership, shareholding limits, and dilution requirements(p.152)
- • Foreign investment restrictions and regulatory approval requirements(p.152)
- • Complex regulatory framework on deposit insurance and resolution(p.151)
- • Debt recovery tribunal and SARFAESI enforcement risks(p.154)
- • Dividend payout restrictions post-COVID(p.157)
- • Ongoing COVID-19 pandemic uncertainty(p.273)
- • Economic downturn affecting customer repayment capacity(p.272)
- • Intense banking sector competition(p.275)
- • Interest rate volatility impacting margins(p.275)
- • Collateral value depreciation risk(p.273)
- • RBI regulatory changes on provisioning and capital requirements(p.275)
- • Transition to Ind AS with uncertain financial impact(p.276)
- • Regulatory credit concentration restrictions(p.247)
- • Regional concentration in southern India creates geographic vulnerability(p.294)
- • Exposure to industry cyclicality and economic downturns(p.294)
- • High competitive banking sector environment(p.294)
- • COVID-19 pandemic creating ongoing business uncertainty(p.293)
- • Exposure to NPA fluctuations and asset quality deterioration(p.304)
- • Enforcement Directorate investigations and proceedings(p.401)
- • Securities and Exchange Board of India (SEBI) enforcement actions(p.402)
- • Related party litigation affecting shareholder base(p.404)
Promoters
| Name | Role | Pre-Issue | Post-Issue |
|---|---|---|---|
| — | No identifiable promoter | — | — |
| No identifiable promoter | Professionally managed bank | — | — |
| Not disclosed in this part of the document | Promoter | — | — |
| KANNAN ADITYAN.B.R. | Promoter/Shareholder (Bonus shares in abeyance due to litigation) | 5400000 shares (3.78%) | — |
| MARAN.M.G.M. | Promoter/Shareholder (Bonus shares in abeyance due to litigation) | 4265000 shares (2.99%) | — |
Leadership
Krishnan Sankarasubramaniam · Managing Director and Chief Executive Officer
P.A. Krishnan · Chief Financial Officer
Prakash Chandra Panda · Company Secretary and Compliance Officer
Auto-extracted from the company's RHP using AI, with each fact linked to its source passage (hover any row to see the quote & page). Provided for research only, not investment advice — verify against the official RHP before relying on it.
Tamilnad Mercantile Bank IPO FAQs
What is the lot size of Tamilnad Mercantile Bank IPO?
The minimum lot size of Tamilnad Mercantile Bank IPO is 28 shares. One lot costs ₹14,280 at the cut-off price.
When does Tamilnad Mercantile Bank IPO open and close?
Tamilnad Mercantile Bank IPO opened for subscription on 05 Sep 2022 and closed on 07 Sep 2022.
What is the listing date of Tamilnad Mercantile Bank IPO?
Tamilnad Mercantile Bank IPO listed on 15 Sep 2022.