Tamilnad Mercantile Bank IPO

Tamilnad Mercantile Bank Limited

Rs.14,700 /28 shares
Minimum Investment

IPO Details:

IPO date:
5th - 7th September, 2022

Issue size:
Rs. 831.6 crores

Listing at:

Retail quota:

IPO price:
Rs 500 – Rs 525 per equity share

Minimum lot size:
28 equity shares and in multiples of 28 thereafter

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Tamilnad Mercantile Bank Background

Tamilnad Mercantile Bank Limited (TMB) is one of the oldest and leading old private sector banks in India with a history of almost 100 years (Source: CRISIL Report). The bank offers a wide range of banking and financial services primarily to micro, small and medium enterprises (MSME), agricultural and retail customers (RAM). As of March 31, 2022, it had 509 branches, of which 106 branches are in rural, 247 in semi-urban, 80 in urban and 76 in metropolitan centres. Its overall customer base is approximately 5.08 million as of March 31, 2022 and 4.05 million or 79.78% of its customers have been associated with the bank for a period of more than five years.

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As per the CRISIL Report, TMB had the second highest net profit for Fiscal 2022 (FY22) amongst its peers, and its Return on Assets was also higher at 1.66% compared to a median 0.8% for peers for FY22.

The bank was incorporated as ‘Nadar Bank Limited’ in 1921 and its name was changed to ‘Tamilnad Mercantile Bank Limited’ in the year 1962 when it received its license to carry on banking business from the Reserve Bank of India (RBI).

Since its incorporation, having head quartered at Thoothukudi, Tamil Nadu, India, the bank has built a strong presence in the state of Tamil Nadu, with 369 branches and 949 automated teller machines (ATMs) and 255 cash recycler machines (CRMs) as of March 31, 2022. Other than Tamil Nadu, TMB is present in 15 other states and 4 union territories of India and have a sizable presence in the states of Maharashtra, Gujarat, Karnataka, and Andhra Pradesh.

The company has also been consistently growing its customer base from approximately 4.66 million as of March 31, 2020, approximately 4.91 million as of March 31, 2021 to approximately 5.08 million as of March 31, 2022 at the CAGR of 4.41% from FY20 to FY22.

Let us now look at a few competitive strengths and strategies of Tamilnad Mercantile Bank Limited...

Competitive Strengths

+ Strong legacy, loyal customer base and focus on improving servicing framework: With almost 100 years of history, TMB has established itself as a well-recognized scheduled commercial bank having a strong network of branches, ATMs and CRMs across several states of South India including Tamil Nadu being its home state, along with Maharashtra, Gujarat, Karnataka, and Andhra Pradesh, which has enabled the bank to maintain a strong customer base. Further, large portions of its existing customers have been associated with the bank for more than five years, specifically in the states of Tamil Nadu, Andhra Pradesh, Maharashtra, Karnataka and Gujarat contributing 81.61%, 77.33%, 68.55%, 59.96% and 58.44% of the bank’s total customer base in each of these states respectively as of March 31, 2022, and 85.03%, 3.64%, 2.74%, 2.05% and 1.82% of its overall customer base as of March 31, 2022, across the 16 states and 4 union territories where the bank is present.. TMB’s largest branch is located in Mandvi, Mumbai, contributing Rs 20,341.30 million or 2.59% to our Total Business as of March 31, 2022.

+ Strong presence in Tamil Nadu with focus on increasing presence: Since its incorporation, TMB has built a strong and trusted network of customers in the State of Tamil Nadu. As of March 31, 2020, 2021 and 2022, its deposits and advances in the state of Tamil Nadu contributed to 75.93%, 76.33% and 75.06%, respectively, of the total business. As of March 31, 2022, the bank had 4.32 million customers, 85.03% of our overall customer base, contributing to our deposits and advances portfolios in the State of Tamil Nadu. Apart from its home state, Tamil Nadu, the bank focuses on diversifying its reach in TMB’s already existing network including in the states of Gujarat, Maharashtra, Karnataka and Andhra Pradesh. As of March 31, 2022, its businesses, including the deposits and advances portfolios, in the state of Tamil Nadu, Maharashtra, Andhra Pradesh, Karnataka and Gujarat contributed 75.06%, 5.78%, 3.67%, 3.47% and 2.91% to the total business.

+ Advances with focus on MSME, agricultural and retail segments: The bank has traditionally focused on small ticket size loan products to MSME customers, agricultural and retail customers for its growth. The bank has dedicated marketing managers and agri-officers across its regional offices who specifically focus on growing the network of TMB’s existing MSME and agricultural customers. The bank leverages its presence in semi-urban and rural regions where it is located to attract more customers in the RAM segment. It has dedicated branches at Thoothukudi and Chennai in Tamil Nadu, and at Surat, Gujarat to cater to the requirements of MSME customers in these regions. Further, these dedicated branches act as facilitators for the bank’s MSME customers with a focus on improving loan processing timelines and faster disbursals to benefit MSME customers. The bank has structured loan products available to meet the financial requirements of MSME customers, which aids in growing the bank’s MSME customer base across all places where it is currently present. These products include “TMB-Traders & Services”, “TMB – MSME Credit”, “TMB Vehicle Finance”, “TMB-Rice Mill”, “TMB-Dhall Mill”, “TMB-Pharma and Health Care”, “TMB-Micro 117 Entrepreneurs under Pradhan Mantri MUDRA Yojna (“PMMY”), “TMB Vyapari” and “TMB Rental-100” (for business purposes).

+ Consistently growing deposit base with focus on low-cost retail CASA: Apart from the individual segment, the bank has focused on account sourcing on value based CASA products, have started following segmental approach on CASA growth by introducing segment wise CASA products such as Trust, Association, Society, Colleges, Charities (TASC) and CASA accounts of central and state government schemes under its “TMB Savings for Government Segments” account. During the last three Fiscals, the banks overall deposits base has increased from Rs 368,250.27 million in Fiscal 2020 to Rs 409,704.16 million in Fiscal 2021 to Rs 449,331.14 million in Fiscal 2022, owing to an increase in both term deposits and CASA deposits. Professionally managed bank with experienced senior management. TMB’s Board of Directors comprises 11 directors and two nominee directors appointed by the RBI. The 11 directors include its Managing Director and Chief Executive Officer and ten Non-Executive directors, including one woman director and six independent directors. They bring substantial experience and independent directors with diverse experience including sectors such as banking, law, business administration, other streams of finance such as accounting and auditing. The bank’s senior management team’s capabilities, reputation, extensive network of industry relationships, and wide ranging experience in the finance and banking industry is critical to the bank’s strategy to grow, modernise, and develop further. The bank’s senior management team consists of its Managing Director and Chief Executive Officer, Vice President and various General Managers.

Tamilnad Mercantile Bank IPO key Strategies

Here are a few strategies Tamilnad Mercantile Bank Limited has for its business:

Continue to strengthen its product portfolios across deposits and advances
Transformation through technology to improve efficiency and customer experience
Continue to improve asset quality

Key Financials

And finally here’s a look at key financials of Tamilnad Mercantile Bank Ltd:

Revenue from operations

Particulars (in Rs. million)

Particulars (in Rs. million)

How to apply for an IPO?

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Top Tamilnad Mercantile Bank Limited FAQs

The Tamilnad Mercantile Bank Limited IPO has an issue size of Rs 831.6 crore. The IPO opens for subscription on 5th September, 2022, and ends on 7th September, 2022.

The allotment dates are yet to be announced.

Link Intime India Private Limited is the registrar for this IPO.

The dates are yet to be decided.

You can read more about Tamilnad Mercantile Bank Limited and its IPO from the company’s red herring prospectus (RHP) here: