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MUMBAI: According to HDFC Chairman Deepak Parekh, the merger between housing finance major HDFC and the country’s largest private lender HDFC Bank will come into effect on July 1. The boards of HDFC and HDFC Bank will convene on June 30 to provide clearance and approval for the merger, Parekh said on Tuesday.
Parekh further said that the stock delisting of HDFC will be effective from July 13.
This merger, regarded as the largest transaction in India’s corporate history, was agreed upon on April 4 last year.
The combined entity is expected to possess an asset base of approximately Rs 18 lakh crore. Following the merger’s implementation, HDFC Bank will be entirely owned by public shareholders, while the existing shareholders of HDFC will own 41 per cent of the bank.
HDFC Bank will be the surviving entity and will be renamed HDFC Bank Limited. HDFC Ltd shareholders will receive 42 shares of HDFC Bank for every 25 shares of HDFC Ltd that they hold.
On Tuesday, shares of HDFC and HDFC Bank attracted significant attention and closed in positive territory following the announcement of their merger becoming effective from July 1.
HDFC stock experienced a rise of 1.59 per cent, settling at Rs 2,762.50 per share on the BSE. Throughout the day, it reached a high of Rs 2,781, marking a gain of 2.26 per cent.
Meanwhile, shares of HDFC Bank saw an increase of 1.38 per cent, concluding at Rs 1,658 per share, after a rise of 2.23 percent to Rs 1,672 earlier in the day.
How will the merger affect the share prices of HDFC Bank and HDFC Ltd?
The share prices of both HDFC Bank and HDFC Ltd are expected to benefit from the merger in the long term, as the combined entity will have a larger balance sheet, customer base, product portfolio and distribution network.
The merger will also improve the capital adequacy, asset quality and profitability of the merged entity. The share prices of both HDFC Bank and HDFC Ltd may face some volatility in the short term, as the merger will entail integration challenges, regulatory approvals, operational issues and market uncertainties. The merger will also impact the shareholding pattern, earnings per share and book value per share of both the companies.
Analysts covering India’s largest lender, meanwhile, are turning bullish as the completion of the merger removes a major overhang and focus shifts to lender’s ability to capitalize on growth in a robust credit environment for the sector.
Buy recommendations for HDFC Bank are now around 98% of the total calls on the stock, the highest since October 2000, data compiled by Bloomberg show. The lender has seen the biggest improvement in analyst sentiment this year compared with major rivals such as ICICI Bank Ltd, State Bank of India Ltd, and Axis Bank Ltd.
(With inputs from agencies)
Parekh further said that the stock delisting of HDFC will be effective from July 13.
This merger, regarded as the largest transaction in India’s corporate history, was agreed upon on April 4 last year.
The combined entity is expected to possess an asset base of approximately Rs 18 lakh crore. Following the merger’s implementation, HDFC Bank will be entirely owned by public shareholders, while the existing shareholders of HDFC will own 41 per cent of the bank.
HDFC Bank will be the surviving entity and will be renamed HDFC Bank Limited. HDFC Ltd shareholders will receive 42 shares of HDFC Bank for every 25 shares of HDFC Ltd that they hold.
On Tuesday, shares of HDFC and HDFC Bank attracted significant attention and closed in positive territory following the announcement of their merger becoming effective from July 1.
HDFC stock experienced a rise of 1.59 per cent, settling at Rs 2,762.50 per share on the BSE. Throughout the day, it reached a high of Rs 2,781, marking a gain of 2.26 per cent.
Meanwhile, shares of HDFC Bank saw an increase of 1.38 per cent, concluding at Rs 1,658 per share, after a rise of 2.23 percent to Rs 1,672 earlier in the day.
How will the merger affect the share prices of HDFC Bank and HDFC Ltd?
The share prices of both HDFC Bank and HDFC Ltd are expected to benefit from the merger in the long term, as the combined entity will have a larger balance sheet, customer base, product portfolio and distribution network.
The merger will also improve the capital adequacy, asset quality and profitability of the merged entity. The share prices of both HDFC Bank and HDFC Ltd may face some volatility in the short term, as the merger will entail integration challenges, regulatory approvals, operational issues and market uncertainties. The merger will also impact the shareholding pattern, earnings per share and book value per share of both the companies.
Analysts covering India’s largest lender, meanwhile, are turning bullish as the completion of the merger removes a major overhang and focus shifts to lender’s ability to capitalize on growth in a robust credit environment for the sector.
Buy recommendations for HDFC Bank are now around 98% of the total calls on the stock, the highest since October 2000, data compiled by Bloomberg show. The lender has seen the biggest improvement in analyst sentiment this year compared with major rivals such as ICICI Bank Ltd, State Bank of India Ltd, and Axis Bank Ltd.
(With inputs from agencies)
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