Tamilnad Mercantile Bank Limited

Financial Services — Banks - Regional · NSE

₹858.45+₹3.55 (+0.42%)

DalalBaazaar Score

72 / 100

🟢 Good

Verdict

REASONABLE

Risk

Moderate

Driven by negative free cash flow, small-cap size, which brings sharper price swings.

In simple words: Reasonable but unspectacular business quality, with both sales and profits growing well. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:45 pm

Understanding the Business

Company site ↗

The 60-second version of Tamilnad Mercantile Bank Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Tamilnad Mercantile Bank Limited provides banking and financial products and services in India. It operates through the Treasury, Corporate and Wholesale Banking, Retail Banking, and Other Banking Operations segments.

IndustryBanks - Regional

SectorFinancial Services

Employees4,786

Annual revenue₹3,404 Cr

How does it make money?

Turns over ₹3,404 Cr a year. Of every ₹100 of sales, about ₹39 reaches shareholders as profit. Each of its 4,786 employees supports ₹71.1 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹71.1 lakh

Who are its competitors?

The closest listed comparisons in its industry are HDFC BANK LTD, ICICI BANK LTD., KOTAK MAHINDRA BANK LTD, AXIS BANK LIMITED. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?Not assessable from these ratios

For a lender, returns on capital are shaped by leverage and funding cost rather than by pricing power, so the usual financial signature of an advantage does not apply. Judge this one on deposit franchise, cost of funds and asset quality — none of which are in this data.

Peer median ROE13.8%

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +25% while net margin moved +4% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+25%

Margin effect+4%

DalalBaazaar Score

72/ 100

Good

Weighted across six categories. Every point is explained below.

✗ Revenue CAGR of only 7.7% — barely ahead of inflation
• Profit CAGR of 9.1%

Quality vs. Valuation

Company Quality

75/ 100

Good

How good the business is, ignoring the share price entirely.

Valuation

66/ 100

Fair

What you are being asked to pay, ignoring how good the business is.

A reasonable business at a reasonable price — neither the quality nor the valuation stands out in either direction.

Historical Valuation

Current P/E

9.4x

3Y Median

7.1x

40 monthly readings · mean 7.7x · range 5.7x–11.4x

Sector Median

17.0x

median of 4 sector peers

⚠️Current valuation is approximately 32% above its 3y median of 7.1x. Paying more than usual needs a reason — faster growth, a better balance sheet, or a re-rating you believe in.

🟢Against its sector it trades 45% below the peer median of 17.0x.

vs. its own history

Expensive

7.1x median over 40 months · +32%

vs. sector peers

Cheap

17.0x median of 4 peers · -45%

vs. generic bands

Cheap

Below 15x

EV/EBITDA

—

PEG

1.03

What's Good / What's Bad

🟢 What's Going Well1

Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention0

Nothing stands out as clearly deteriorating on the years of data available.

Red Flags

No automated checks triggered

None of the automated financial checks below were triggered on the years of data available. That is not the same as a clean bill of health — see what could not be checked.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Cheaper than its peers
It trades 45% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

The price already assumes success
The stock trades 32% above its own median multiple. At this level the business has to deliver just to stand still, and a stumble is repriced twice — lower earnings on a lower multiple.
Growth barely outpaces inflation
Revenue compounding at 7.7% a year is close to the rate prices rise, so the business is gaining little ground in real terms. That leaves the share price dependent on a re-rating rather than on earnings growth.
Size brings its own risk
Small Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Return on equity stays above 13%✓ 14.5%
For a lender this is the cleanest single read on whether the book is being grown profitably.
2Revenue growth stays above 6% a year✓ 7.7% CAGR
Latest reported year was 18.3%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
3Valuation vs its own median of 7.1x✗ 9.4x today
A re-rating above its own history needs a reason; without one it is just a higher price.

Investment Checklist

5 / 9 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✓ Healthy net margin (≥ 10%)
✗ Generates positive free cash flow
✗ Manageable leverage (Debt/Equity < 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

5 good · 4 neutral · 2 weak

Market Cap

₹13,594 Cr

Small Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

9.4x

Cheap

Cheap against the generic band

P/B Ratio

1.29x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹91.21

Profitable

Profitable on a per-share basis

ROE

14.5%

Moderate

Moderate capital efficiency

ROCE

Not meaningful

N/A for lenders

Banks and NBFCs don't report capital employed the way other businesses do

Debt/Equity

6.92x

High

High leverage

Revenue Growth (YoY)

18.3%

Healthy

Healthy top-line growth

Profit Growth (YoY)

35.0%

Healthy

Profits growing at a healthy clip

Dividend Yield

1.46%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

-₹229 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

ROA

2.0%

Weak

Assets generate little profit

Operating Margin

58.7%

Good

Healthy core-business profitability

Net Margin

41.2%

Good

Strong bottom-line conversion

Beta (vs Nifty)

0.39

Defensive

Steadier than the market

52W Range Position

81%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

876.6 / 884.0

Bearish alignment (short < long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

40.1

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹2,723 Cr	₹2,796 Cr	₹3,151 Cr	₹3,404 Cr	+7.7%
PAT (Net Profit)	₹1,029 Cr	₹1,072 Cr	₹1,183 Cr	₹1,338 Cr	+9.1%
EPS	₹68.06	₹67.7	₹74.68	₹84.47	+7.5%
ROE	14.9%	13.5%	13.1%	13.2%	—
Total Debt	₹525 Cr	₹500 Cr	₹500 Cr	₹700 Cr	+10.1%
Free Cash Flow	-₹1,359 Cr	-₹711 Cr	₹1,794 Cr	-₹229 Cr	—

🟢 Revenue has grown at 7.7% a year over 3 years.

🟢 PAT (Net Profit) has grown at 9.1% a year over 3 years.

🟢 EPS has grown at 7.5% a year over 3 years.

🔴 ROE has fallen from 14.9% to 13.2% over 3 years (-1.6 pts).

🔴 Total Debt has grown at 10.1% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹75,300 Cr

Total Liabilities

₹65,189 Cr

Cash & Equivalents

₹4,215 Cr

Operating Cash Flow

-₹101 Cr

Capex

-₹128 Cr

Shareholding (proxy)

Institutional Holding

4.1%

Insider Holding

29.6%

Corporate Actions

Dividend Rate

₹12.5

Ex-Dividend Date

12 Jun 2026

Peer Comparison

Company	P/E	ROE
HDFC BANK LTD	15.9x	13.8%
ICICI BANK LTD.	18.1x	16.5%
KOTAK MAHINDRA BANK LTD	21.9x	11.2%
AXIS BANK LIMITED	14.5x	13.4%

Recent News

3 mixed3 general

Tamilnad Mercantile Bank vs Nifty 50 Returns: +101.20% vs -10.93%

Univest, 12 Oct

Tamilnad Mercantile Bank shares surge 5% after strong Q1FY27 business update

The Economic Times, 02 JulPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

Here's Why Tamilnad Mercantile Bank (NSE:TMB) Has Caught The Eye Of Investors

Simply Wall Street, 16 Sept

Tamilnad Mercantile Bank zooms 13% to hit 52-Week high on steady Q4 results

Business Standard, 27 AprResults

🟡Mixed / dependsA results event. The figures on this page update once the new statements reach the data feed, which usually lags the announcement.

Tamilnad Mercantile Bank To Meet Analysts And Investors On September 24

Sahi, 17 SeptAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Banking on valuation comfort

BusinessLine, 26 Apr

Watch Items

This is a financial-sector business: borrowing is its raw material, not leverage in the usual sense. Debt/Equity and ROCE here aren't comparable to a manufacturer's — read them alongside NIM, GNPA and capital adequacy from the company's own disclosures.
Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

StrongBusiness Quality · Financial Health · Profitability · Valuation

MiddlingGrowth · Risk

Points for each in the Score ↑

Good business at a fair price

A sound business at a reasonable valuation. Suitable for a long-term holding, with the valuation and the direction of margins worth watching rather than the business itself.

1 of 3 tripwires tripped — Valuation vs its own median of 7.1x · see Key things to watch ↑