The bank is looking at a 10% dilution in shares post issue, CEO KV Rama Moorthy said in an interview to ET.
“We are planning to hit the market by the third quarter of the fiscal. The calculations are being made but post the offer for sale and fresh issue of shares we expect a 10% dilution in our equity base,” Moorthy said.
The bank’s book value per share stood at Rs 321.38 at the end of March 2021 and Moorthy said he expects a valuation of 1.8 times to 2 times its book value.
“Out capital adequacy ratio is 18.94% so we do not require any more capital. This issue is to adhere to regulatory norms and also help shareholders unlock some value,” Moorthy said.
The bank made a net profit of Rs 181 crore in the quarter ended March 2021 from Rs 164 crore a year earlier, a growth of 10%.
Net interest income, the core income a bank earns from loans, increased 8% to Rs 375 crore in March 2021 from Rs 346 crore a year earlier.
Non interest income, which includes fees and commissions, increased 14% to Rs 196 crore from Rs 172 crore a year earlier. Net interest margin or the difference between the yield a bank earns on loans and that it pays on deposits improved to 3.77% from 3.64% a year ago.
Moorthy said he expects to complete the pre-IPO process in the next couple of months.
“We were waiting for the full year results to be out now that it is done we will start the process for the IPO which includes appointment of investment bankers and do other legal processes which should take two months,” Moorthy said.
The bank reported a net profit of Rs 603 crore in the year ended March 2021, up 48% from Rs 408 crore a year earlier.
Deposits grew 11% to Rs 40,970 crore, while advances grew 12% to Rs 31,542 crore.
Moorthy expressed confidence that the current second wave of Covid 19 pandemic will subside and aid in economic recovery from the second quarter of the fiscal.
“There has been limited impacted on us in terms of collections. We have to watch the situation till June but I expect things to be better with the roll out of vaccines, government efforts to ensure medicines and herd immunity which will build as we go forward. All these factors will aid economic growth and recovery,” Moorthy said.
TMB had 509 branches and 1,132 ATMs across India. It’s loan book is heavily skewed towards retail, agriculture and micro and small enterprises which together constitute 79% of its loans.
All these loans totalling Rs 22,540 crore are classified as priority sector according to RBI norms and have clocked 18% to 23% growth during the fiscal ended March 2021.
So far the bank’s asset quality has held up well with gross NPAs down to 3.44% in the quarter ended March 2021 from 3.62% a year earlier. The bank’s provision coverage ratio stands at 79.53% in March 2021 down from 80.75% a year ago. It has made an additional standard asset provision for the second wave of Rs 50 crore.
