HDFC and HDFC Bank fell sharply for the third consecutive day after the announcement of merger offers. HDFC TWINS succumbed to a profit booking, HDFC dropped 1.82% to RS 2490.25. HDFC BANK marketed 1.06% in RS 1534.35. The course of the action of HDFC Bank and HDFC had increased by about 10% on Monday after the announcement of the merger agreements. However, over the last three days, these actions have lost a significant portion of the gains on the day when merger offers have been announced.”Given many subsidiaries that need to be merged, there may be overlooking regulations, particularly in the insurance activities where the central bank is not very comfortable with banks that increase their participation” , said an analyst at a home brokerage.
HDFC Bank Monday stated that its board has approved the merger of HDFC and HDFC holding investments with HDFC and HDFC in the HDFC Bank. The combined entity would create a new financial sector in India and following the overvoltage of the course of action on Monday, the market capitalization of the two had exceeded that of TCS.HDFC Bank said the proposed transaction will allow HDFC BANK to create its housing loan portfolio and improve its existing clientele. The private lender stated that the proposed transaction is based on the exploitation of existing significant complementarities between the parties.The proposed transaction would create a significant value for various stakeholders, including respective shareholders, clients, combined enterprises that benefit from an increase in the scale, a comprehensive supply, resilience of the balance sheet and the ability to conduct synergies through income opportunities, operational efficiency and subscription. Efficiency gains, among others, “he says
HDFC has total assets of 6.23 420.03 crore, RS 35 681.74 crore turnover and net worth of 1,400.48 crore as at December 31, 2021. The HDFC bank, on the other hand, has assets Totals of 19.38 285.95 crore, sales (included other income) of 1.16 177.23 crore for the nine months ended December 31, 2021 and a net worth of 2.23 394.00 Rupees de crore, as of December 31, 2021.
HDFC Twins Merger Gets Thumbs Up From Brokerages
Jyoti Roy, DVP-Strategister of the team, Angel One Ltd., “The merger between HDFC and HDFC Bank is a positive development for the HDFC group. The agreement is 4% and BV of 4% and 8% respectively For HDFC Bank on a pro forma basis and is therefore of rising value for the existing shareholders of the HDFC Bank. The merger is positive for the HDFC group because it will attenuate the risk of single product for HDFC Ltd. and will also provide access. to low-cost Casa deposits. In addition, this will allow the two entities a significant range of the sale of their products on customers of each. Although additional prudential requirements such as CRR / SLR and PSLC are revealed to be a trail on Margins for HDFC Ltd. We believe that access to low-cost Casa deposits will offset most of the trail of margins. Publish the Merger Announcement We maintain our purchase note on the HDFC bank with a target of RS. 1,859.The benefits of the proposed merger at the same time HDFC Bank and HDFC, while it would be EPS (earnings per share) -Crecretive in the first full year (FY25), CNBC-TV18 Cité Morgan Stanley as saying.ROE (Return on Equity) falls into the accretion of short-term capital, while the collection of loan growth would involve a pre-merger ROE through 20026, it added.
The analysts of Prabhudas Lilladher said, while the merger seems attractive purely from the point of view of the scale, we must take into account some key variables. First, the merged entity should adhere to the CRR / SLR and PSLC requirements that would be a slight drag on the margins. Second, HDFC Bank can not subscribe to a portion of the developer loans that HDFC used on board, which could be countered by addition of housing loans below. As a result, global returns can compress. This would be offset by a lower cost of funds due to the Bank’s access to CASA deposits.
On a level of operation, branches in similar locations can be merged that could save on costs, even if the branches are not present in common places, transition costs would be engaged. Hence Prima Facie, it seems that the ROE for HDFC Bank can drop current levels, immediately after the merger, although the fusion is positive from a scale and from a transverse point of view. Roll forward towards 20024ABV, we maintain several to 3.6 times, but increase the price of the target to 2,000. Maintain purchase.