Tamilnad Mercantile Bank files DRHP for IPO. Check details here

by 5paisa Research Team 06/09/2021

Tamilnad Mercantile Bank has filed its draft red herring prospectus with the capital markets regulator Securities and Exchange Board of India to launch an initial public offering (IPO).

The lender, which is based in the port city of Thoothukudi (Tuticorin), plans to issue 1.584 crore equity shares with a face value of Rs 10 each. This comprises a fresh issue of 1.5827 crore shares and an offer for sale of 12,505 shares by existing shareholders, the DRHP shows.

The bank plans to use the net proceeds from the fresh issue to boost its Tier-I capital base, which will help it meet its future capital requirements. 

Tamilnad Mercantile Bank has a strong presence in southern India, and in particular, in its home state of Tamil Nadu. It also operates in Gujarat, Maharashtra, Karnataka and Andhra Pradesh.

As of June 30, 2021, the bank had 509 branches. Of these, 106 branches were in rural areas, 247 in semi-urban regions, 80 in urban and 76 in metropolitan centres. It had a customer base of about 4.93 million as of June 30, 2021. Nearly 70% of its customers have been associated with the bank for more than five years and contribute 67% to its deposits and 57.56% to its advances as of June 2021.

Total deposits of the bank have increased at a CAGR of 8% from Rs 35,136.25 crore in fiscal 2018-19 to Rs 40,970.42 crore in fiscal 2020-21. Tamil Nadu’s share in its deposits was 76.33% for 2020-21.

The bank’s net interest income jumped to Rs 1,537.5 crore for 2020-21 from Rs 1,319.5 crore in 2019-20. It posted a net profit of Rs 603.3 crore for 2020-21, sharply up from Rs 407.7 crore the year before. 

Axis Capital, Motilal Oswal Investment Advisors and SBI Capital Markets are the book running lead managers for the IPO.