InvestorQ : Can you tell me about the business background and the financials of Tamilnad Mercantile Bank, which has announced its IPO?
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Can you tell me about the business background and the financials of Tamilnad Mercantile Bank, which has announced its IPO?

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Niti Shenoi answered.
2 months ago
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Tamilnad Mercantile Bank, which has just announced its IPO details opening on 05th September, was established in the coastal town of Thoothukudi in Tamil Nadu in the year 1921. With a history of 100 years, Tamilnad Mercantile Bank (TMB) caters to the retail, agriculture and the MSME (RAM) segment. In terms of its spread, Tamilnad Mercantile Bank has a 509-branch network and a customer base of more than 5 million. Out of 509 branches, a predominant 369 branches are located in the state of Tamil Nadu and the rest in 15 states.

The issue is a fresh issue as the bank needs to raise capital to meet its capital adequacy requirement on the Tier-1 front. Tamilnad Mercantile Bank is unlisted so they would also be looking at the IPO for getting the benefits of listing like better visibility, reach and market based valuations. Over the years, TMB has built deep domain skills in the local market. The bank is consistently profit making, as also the profits have been growing much faster than the median growth in the banking sector overall in India.

Financials of TMB are quite strong. Between FY20 and FY22, net profits of Tamilnad Mercantile Bank surged from Rs465 crore to Rs902 crore. The total revenues of TMB during this 2 year period was up from Rs3,993 crore to Rs4,657 crore. Gross NPAs of Tamilnad Mercantile Bank fell from 3.44% to 1.69% and its net NPAs have also fallen proportionately. The CASA (current and savings accounts) ratio at 30.5% has improved over previous year, but is much lower than other new private sector banks in India.

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