IDFC First Bank’s Shares Surge Over 3% After RBI Approves IDFC Merger

IDFC First Bank's Shares Surge Over 3% After RBI Approves IDFC Merger

VoM News Desk | December 19, 2023 | 07:53 PM IST | Breaking News | Follow on Google News

IDFC First Bank’s Shares Surge Over 3% After RBI Approves IDFC Merger Image/Mint

IDFC First Bank’s Shares Surge Over 3% After RBI Approves IDFC Merger

On December 19, IDFC First Bank witnessed a rise of over 3%, peaking at ₹92.33 per share, subsequent to the Reserve Bank of India (RBI) green-lighting the amalgamation of IDFC and IDFC Financial Holding Company with the bank.

In the preceding month, the private sector lender’s stock exhibited growth surpassing 6%, a slightly lower figure compared to the 8% surge in the benchmark Sensex. Notably, the shares of IDFC First Bank had previously achieved a 52-week high of ₹100.74 per share on September 5, 2023.

According to the exchange filing, the RBI granted approval for the composite scheme of amalgamation, subject to specific terms and conditions. However, the scheme remains contingent upon various statutory and regulatory approvals, including the sanction of the National Company Law Tribunal and consent from the respective shareholders of the entities involved in the merger.

The merger plan, announced on July 3, involves IDFC First Bank issuing 155 shares in exchange for every 100 shares of IDFC. The financial institution had previously reported robust loan growth, recording a substantial 26.1% year-on-year increase in the July-September quarter. This growth primarily stemmed from advances in home loans, automotive financing, and rural finance.

Axis Securities, a brokerage firm, revised the bank’s growth rates and value to 1.9x, stating, “With H2FY24 expected to remain strong, we revise our estimates for advances growth upwards and value the bank at 1.9x FY25E ABV. With the festive season in H2FY24 and with H2 seasonally being better than H1, we believe advances growth would be better in H2FY24,” as mentioned in its report.

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