However, a number of people know that a century old lender has been an active counter of the unlisted market for years. The stock is trading in the range of Rs 525-550, a mild premium compared to its price band of Rs 500-525.
However, the stock has seen a sharp correction of close to 30 per cent from Rs 725-750 in the last few months, and stabilised near the current levels.
Since the stock is trading almost close to the issue price, should you buy it from unlisted space to get the sure shot allotment and lofty returns?
One should understand that any pre-IPO equity has a mandatory lock-in of at least 6 months from the date of IPO allotment, but in this case it is 12 months as TMB is a professionally managed bank and does not have any identifiable promoters.
So, if you buy shares ahead of the issue from an unlisted market, you cannot sell them before September 12, 2023, as the shares will remain in lock-in till then.
On the contrary, investors may look for some pre-IPO shopping as the retail quota is fixed at only 10 per cent of the issue with no guaranteed allotment and QIB taking 75 per cent of the shares. NII’s will get the remaining 15 per cent.
Sandip Ginodia, CEO of Kolkata-based Altius Investech, said that the lender has a century old legacy and the valuations are reasonable at current levels. leaving something on the table for investors.
“If investors have an appetite for the long term, one can get decent returns in the good times and expansion plans play out well,” he said. “The downside is capped for TMB due to strong performance.”
Thoothukudi-based 101-year old lender would be looking to open new branches after IPO, which is currently restricted by the Reserve Bank of India (RBI) with a three-year ban.
Narottam Dharawat of Mumbai-based Dharawat Securities said that the shares are trading at par as the issue is hurried up and the sentiments for the bank and NBFCs are not so positive.
“The lender has strong financials and one should buy from an unlisted market only with a long term view,” he added. “The bank is facing various internal and legal issues, which dent its sentiments in the short run.”
However, not everyone is gung-ho over Tamilnad Mercantile Bank citing its limited or south-centric reach despite a 100 year old history.
Dinesh Gupta, co-founder of Delhi-NCR based UnlistedZone said that TMB is just like any other private lender with good financials and strong balance sheet. “There is nothing over the top about the lender.”
Despite being a 100 year old the lender has not been able to mark pan India presence, he added. “We are not overly positive and investors can also buy any strong private bank from the secondary space with similar fundamentals.”
The lender had 509 branches as of March 31, 2022, of which about 72 per cent are in Tamil Nadu only. However, it has a presence in Gujarat, Maharashtra, Karnataka, Andhra Pradesh and Delhi.
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)
