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HDFC, HDFC Bank shares rise 10% on merger announcement

By Ruchi Upadhyay 
Updated Date

New Delhi: Mortgage lender HDFC on Monday announced that it will merge with private lender HDFC Bank. “The share exchange ratio for the amalgamation of the Corporation (HDFC Ltd) with and into HDFC Bank shall be 42 equity shares (credited as fully paid up) of the face value of Re 1 each of HDFC Bank for every 25 fully paid-up equity shares of the face value of ₹ 2 each of the Corporation,” HDFC stated in a regulatory filing.

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“The merger is subject to the receipt of requisite approvals from the Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), the Competition Commission of India, the National Housing Bank (NHB), the Insurance and Regulatory and Development Authority, the Pension Fund Regulatory and Development Authority, the National Company Law Tribunal, BSE Limited and the National Stock Exchange of India Limited and other statutory and regulatory authorities, and the respective shareholders and creditors,” it added.

“Shareholders of HDFC Limited as on the record date will receive 42 shares of HDFC Bank (each of face value of Re.1), for 25 shares held in HDFC Limited (each of face value of Rs.2), and the equity share(s) held by HDFC Limited in HDFC Bank will be extinguished as per the Scheme. As a result of this, upon the Scheme becoming effective, HDFC Bank will be 100% owned by public shareholders and existing shareholders of HDFC Limited will own 41% of HDFC Bank,” the companies stated.

Pavitraa Shetty, co-founder & trainer, Tips2Trades said, “Despite strong fundamentals and consistent financial performances since the pandemic, HDFC group stocks haven’t gone up much making them all the more attractive. This merger should bring about positive synergies, further consolidate leadership position in different segments including housing loans & credit cards, a strong re-rating and focus on internet banking augurs well for HDFC stock to begin its uptrend sooner than later. Technically, a close today above Rs 1,600 could lead to Rs 1,720 in the coming days. Investors are better off buying at levels closer to Rs 1,480- Rs 1,500 for better returns.”

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