HDFC Bank share price surged 15% and this has delighted the investors, stock market and its shareholders. This happened as soon as the bank has approved merger with HDFC Investments Limited and HDFC Holdings Limited.
Post-merger HDFC Limited will hold 41% stake in HDFC Bank. This shall enable the bank to build its housing loan portfolio and enhance its existing customer base. HDFC Bank shares jumped as much as 14.4%, while HDFC Ltd surged 19.6% after the merger announcement.
As part of the deal announced, shareholders of HDFC Ltd will receive 42 shares of the bank for 25 shares held. Existing shareholders of HDFC Ltd will own 41% of HDFC Bank, the combined entity, which will become a full-fledged public company as the housing finance company’s stake in the lender will be cancelled in the deal.
HDFC Share Price Likely to Move Further
“We expect HDFC Bank’s margin trajectory to recover gradually over FY23, while the uptick in Retail loan growth and unsecured products will be supportive of fee income. Trend in Retail deposit too remains healthy, with the bank witnessing a sequential improvement in its CASA ratio to 48%,” said brokerage house Motilal Oswal. It has maintained its Buy rating on bank stock with a target price of ₹2, 000 per share.
The companies expect the deal to be completed in the second or third quarter of the financial year starting in April 2023.