MUMBAI, NEW DELHI, 3^rd SEPTEMBER, 2022 (GPN):  Tamilnad Mercantile Bank (TMB) is all set to launch its initial public offering on BSE Dalal Street on Monday September 5 to raise rupees 832 crore from its primary stake sale.

TMB is a professionally managed bank with a strong management team and a century old legacy.

The Retail Quota is fixed at only 10% of the issue with no guaranteed allotment While QIB taking 75% off the shares, NII will get the remaining 15%.

Investors are likely to get decent Returns in long term looking at strong performance of the bank.

The 101 year old Lender is looking to open new branches post IPO, if the expansion plans play out well there will be good long term returns in this issue.

The Thoothukudi (formerly Tuticorin) Headquartered lender has 509 branches as of March 31 2022 of which about 72% are in Tamilnadu only. While for the remaining 28%, The Bank has a presence in Gujarat, Maharashtra, Karnataka, Andhra Pradesh and Delhi. The South Indian lender is looking forward to expand it’s footprints pan India.

The Lender has strong financials with an overall good balance sheet but as the bank is facing some internal and legal issues immediate short term gains is unlikely. The valuations are reasonable at the current level leaving something on the table for investors with a promising century old legacy of the bank.

GPN was able to meet some of the Bank’s Top Management during the announcement of the IPO last week.

Shri Dhanushkodi Nithyanandam Nirranjan Kani, director with VVD AND SONS PRIVATE LIMITED, is registered with the Ministry of Corporate Affairs (MCA).

He is an Indian staying in Chennai, Tamil Nadu, India.

Shri Dhanushkodi Nithyanandam Nirranjan Kani is currently associated with 2 Companies and is director with Vvd And Sons Private Limited, Tamilnad Mercantile Bank Limited.

The total paid-up capital of all companies where Dhanushkodi Nithyanandam Nirranjan Kani holds active positions is ₹1,481,254,080.00.

Shri D N Nirranjan Kani was previously associated with 4 companies, Ecogreen Cleantech Private Limited, Holista Tranzworld Private Limited, Ecoclean Adsorbent Private Limited, Neatvin Enterprises Private Limited.

Present Active Positions Held:-

1) Tamilnad Mercantile Bank Limited

Location – Tuticorin, Tamil Nadu

Founded –May 11 1921 Company Staus –Active

• Designation – DirectorAppoitment – 03 Oct 2019

2) Vvd And Sons Private Limited

Location – Tuticorin, Tamil Nadu

Founded –March 17 1999 Company Staus –Active

• Designation – DirectorAppoitment – 17 Mar 1999

The Tamilnad Mercantile Bank (TMB) Management Information:

Name	Designation
A Niranjan Sankar	Non Executive Director
B S Keshava Murthy	Independent Director
B Vijayadurai	Part Time Chairman & Independent Director
Balakrishnan Prabaharan	Independent Director
C Chiranjeevi Raj	Independent Director
D N Nirranjan Kani	Non Executive Director
K Nagarajan	Independent Director
Krishnan Sankarasubramaniam	Managing Director & CEO
Natarajan Gopal	Nominee Director
P A Krishnan	Chief Financial Officer
P C G Asok Kumar	Non Executive Director
Prakash Chandra Panda	Co. Secretary & Compl. Officer
S Babu Suresh Kumar	Independent Director
S Ezhil Jothi	Independent Director
S R Ashok	Non Executive Director

TMB has many listed peers and hence will face competition from them once it gets listed on exchanges. Below are its listed peers and comparison:

TMB’s listed peers include City Union Bank, CSB Bank, DCB Bank, Federal Bank, Karur Vysya Bank, Karnataka Bank, RBL Bank, and South Indian Bank.

In terms of revenue, the largest among listed peers is Federal Bank, followed by RBL Bank. TMB falls towards the bottom of the revenue list.

However, if we look at Earning Per Share (EPS), TMB tops the list with an EPS of 57.67, followed by CSB Bank with an EPS of 26.43.
The bank is quoting a P/E of 9.11, which is lower than some of the listed peers like City Union Bank and Federal Bank. Hence, at the listing price, TMB looks attractive.

For Return on Equity ratio, the company outperformed peers at 16.58% in FY22, while its peers reported a median of 8.30%.
The bank’s return on assets (RoA) was at 1.66% compared with peers that have a median RoA of 0.80%.

Return on Net Worth (RoNW) is second for TMB (15.40%), below CSB Bank, which has a RoNW of 17.29%.

GPN REVIEW:

Robust rise in core income: Tamilnad Mercantile Bank has reported a robust 17% CAGR rise in its Net Interest Income between FY20- 22, baked by an improvement in margins.

Healthy increase in deposits: Total deposits of the Bank have increased at a CAGR of 10.46% to Rs 44,933 crore in FY22. With over 100 years of history, TMB has established itself as a well-recognized scheduled commercial bank having a strong network of branches, leading to a good rise in deposits.

Solid rise in net profit: The bank’s profit has risen to Rs 822 crore from Rs 408 crore in FY20, implying a CAGR of 42%.
Healthy margins: The net interest margins have improved to 4.1% from 3.64% in FY20.
Superior asset quality: Tamilnad Mercantile Bank’s asset quality has seen a significant improvement over the year. The Net NPA dropped to 0.95% from 1.8% in FY20. The gross NPA has also declined from 3.62% to 1.69%.

Superior return ratios as compared to peers: According to a CRISIL Report, TMB had the second highest Net Profit for Fiscal 2022 amongst Peers, and the Return on Assets was also higher at 1.66% compared to a median of 0.80% for its Peers for Fiscal 2022.

Reasonable valuations: At the higher end of the price band, Tamilnad Mercantile Bank IPO is priced at about 1.4 times FY22 Book Value (Post issue) which is at discount to peers having a similar return ratio profile.

TMB – Tamilnad Mercantile Bank IPO Final Verdict: Given factors such as a strong deposit franchise, superior return profile as compared to peers, strong asset quality, healthy margins and a reasonable valuation, analysts have given a ‘positive’ rating on the company’s long-term prospects
-Ends.