After the business announced the share swap ratio for its much-anticipated merger with the banking arm on July 4, the IDFC shares started that day 4 percent higher.
This happened after the board of the two entities IDFC Ltd and IDFC First Bank announced on 3rd July, the share swap ratio for the merger. Accordingly, for every 100 equity shares held, IDFC Ltd. shareholders will get 155 equity shares in IDFC First Bank.
IDFC Ltd. stockholders are receiving a premium of 17% as of the company's closing price on July 3. Compared to its closing price on Friday (June 30), the IDFC stock increased by 7% on Monday, representing a 24 percent premium.
As of July 3, IDFC Ltd finished at Rs. 109.90 on the NSE, while IDFC First Bank ended the day at Rs. 81.70.
The merger will probably be finished this year.
The non-financial holding firm of IDFC owns a 39.93% share in IDFC FIRST Bank. Based on audited financials as of March 31, 2023, the bank's book value per share will rise by 4.9 percent following the merger.
"Book value for IDFC First was Rs 39 in Q4 FY23. After the merger, it would increase by 5%, reaching Rs 41." According to Aditya Kondawar, Partner, Compcircle, this translates to a price-to-book value of two times.
According to the bank's petition, the merger will simplify the corporate structures of IDFC FHCL, IDFC Limited, and IDFC FIRST Bank by combining them into a single company. It will also make the aforementioned firms' regulatory compliance procedures easier to manage.
Since the merger, the deposit franchise of IDFC First Bank has grown at a four-year compound annual growth rate (CAGR) of 36%, and it will reach Rs 1.36 lakh crore by March 31, 2023. After merging with Capital First in December 2018, the bank's current account and savings account (CASA) ratio grew from 8.6% to 49.77% through March 2023.
(The news is in consideration with Moneycontrol)
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