HDFC Bank and HDFC Ltd are set to finalize one of the largest mergers in corporate India next month. The boards of both entities will meet on June 30 to provide their final approval for the deal. HDFC chairman Deepak Parekh, alongside deputy Keki Mistry, confirmed that the necessary approvals are nearly in place, with the merger process expected to be effective from July 1. HDFC’s shares will be delisted on July 13 and the merged entity commencing trading on July 17. After over four decades of leading the mortgage lender, Deepak Parekh will step down upon the merger’s completion. However, HDFC clarified that the merger and delisting dates are tentative, subject to certain formalities. The amalgamation will result in an asset base of Rs 18 lakh crore, creating the 10th largest bank globally. Shareholders of HDFC will own 41% of HDFC Bank, with the merged entity estimated to have a market cap of $145 billion. The merger is expected to strengthen the bank’s capital position for the foreseeable future, given improved risk density and strong asset quality metrics.
The surge in Share prices
Following news of the merger, HDFC and banking shares experienced a rally, driving the Sensex up by 446 points. HDFC stock rose by 1.59% to Rs 2,762.50, while HDFC Bank settled at Rs 1,658 with a 1.38% increase. Other banking stocks like SBI, Axis Bank, Kotak Bank, ICICI Bank, and IndusInd Bank also saw positive gains. The market surge was primarily fueled by the merger updates from HDFC, according to Vinod Nair, Head of Research at Geojit Financial Services. Nuvama Research predicts an inflow of $29 million into HDFC Bank’s scrip due to NSE’s quarterly rebalancing of indices on June 28.