Quote on HDFC Bank and HDFC Ltd merger By Ajit Kabi, LKP Securities
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Below Is Quote on HDFC Bank and HDFC Ltd merger By Ajit Kabi, LKP Securities
"The amalgamation between HDFC Bank and HDFC Ltd is a fruitful deal for both the parties. As a part of the merger between HDFC Ltd. and HDFC Bank, 42 shares of HDFC Bank would be given for every 25 shares of HDFC Ltd. Post the amalgamation, HDFC Bank will be 100% owned by public shareholders and existing shareholders of HDFC Ltd. will own 41% stake in the bank. The foreign stake is around 8% in the bank and is likely to increase. The merger is subjected to regulatory approvals and is expected to be completed by 3QFY24. We expect the technological platform to be well synchronized and shall enable the bank to build a larger housing loan portfolio. The proportion of unsecured loan will be narrowed down and it will drag down the risk weight, hence improvement in the capital buffer. Despite the larger housing book, the NIMs are likely to stay stable as the bank’s aggressive approach to build a low-cost CASA deposit. The valuation (4x) is still attractive after double-digit single day growth. We believe it’s the win-win situation for both shareholders"
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