HDFC and HDFC banks fell sharply for the third consecutive day after the announcement of the merger offer. Twins HDFC has given up on earnings ordering, HDFC fell 1.82 percent to RS 2490.25. HDFC Bank traded 1.06 percent at Rs 1534.35. The share price of HDFC Bank and HDFC has jumped around 10 percent on Monday shortly after the mergger agreement was announced. However, in the last three days, this stock has lost most of the profits made in the day when the merger agreement was announced.

“Given that there are many subsidiaries that need to be combined, there may be some regulatory overhang, especially in the insurance business where the central bank is not too comfortable with banks to increase their shares,” said an analyst at the domestic broker house.

HDFC Bank on Monday said the council had approved the incorporation of HDFC and HDFC Holdings investment with HDFC and HDFC to HDFC Bank. The combined entity will create a new financial sector behemot in India and follow the surge in stock prices on Monday, the market capitalization of both has surpassed TCS.

HDFC Bank said the proposed transaction would enable HDFC bank to build a housing loan portfolio and increase the existing customer base. Personal lenders said the proposed transaction was based on utilizing a significant complement that was among the parties.

“The proposed transaction will create meaningful values ​​for various stakeholders including each shareholder, customer, employee, because the joint business will benefit from scale increases, comprehensive product offerings, balance resistance and the ability to encourage synergy throughout income opportunities , operating efficiency and guarantee efficiency, among others, “he said

HDFC has total assets of RS 6.23.420.03 Crore, RS turnover 35,681.74 Crore and Net Wealth Rs 1,15,400.48 Crore on December 31, 2021. HDFC Bank, on the other hand, has total assets of RS 19.38,285.95 Crore, Substitution (including other income) of Rs 1,16,177.23 Crore for the nine months ended December 31, 2021, and Net Wealth Rs 2,23,394.00 Crore, on December 31, 2021.

HDFC twin merger gets a thumbs up from the broker

Jyoti Roy, DVP-Equity Strategy, Angel One Ltd., “Merger between HDFC and HDFC Bank is a positive development for HDFC Groups. The agreement is EPS and BV accretion of 4% and 8% for HDFC banks with a pro forma base and Therefore the value of an accretion for the existing HDFC bank shareholders. The merger is positive for HDFC groups because it will reduce the risk of a single product for HDFC Ltd. and also provide access to CASA deposits at a low cost. In addition, this will allow both significant scope entities to sell Cross their products to their respective customers. While additional caution requirements such as CRR / SLR and PSLC will be proven to be dragged on margins for HDFC Ltd. We believe that access to low-cost CASA deposits will compensate for most drags on margins. Posting The announcement of the merger we maintain our purchase rankings on HDFC Bank with RS targets. 1,859. “

The benefits of the proposed merger, both HDFC Bank and HDFC, while it will become EPS (earnings per share) -Accretive in the first full year (FY25), CNBC-TV18 quotes Morgan Stanley.

ROE (Return on Equity) falls in the near future given the increase in capital, while pick-up loan growth will imply pre-merger Roe by FY26, he added.

Analyst at Prabhudas Lilladher said, while the merger will look purely interesting from the scale perspective we need factors in several major variables. First, the combined entity needs to comply with the requirements of CRR / SLR and PSLC which will be a few obstacles to the margin. Second, the HDFC Bank may not bear the loan pieces of developers used by HDFC to onboard which can be resisted with the addition of housing customer loans under prime. Therefore the overall results might be compressed. This will be balanced with lower funding costs due to bank access to CASA deposit.