HDFC Twins dominate the market!

The announcement of the mega-merger of these two giants has received a phenomenal response.

On Monday morning Housing Development Finance Corporation (HDFC), India’s leading housing finance company announced a merger with HDFC Bank, India’s leading private sector bank. This news received a phenomenal response as shares of both entities grew tremendously.

This is one of the biggest mergers in the Indian Financial sector. The share ratio is as follows: 42 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 Rs 2 each of HDFC.

Post the merger, HDFC Bank will be owned 100% by public shareholders and existing shareholders of HDFC will own around 41% of HDFC Bank. All subsidiaries of HDFC will be owned by HDFC Bank. The transaction is expected to be completed by the third or fourth quarter of FY24. Today the combined market value of both the entities was Rs 14,22,652.57 crore showcasing that it surpassed TCS, indicating that it could be India’s second-largest company after the merger. A possibility that this merged entity may get included in the MSCI Index has been stated.

The merger will enable improved operational efficiency, reduction in default rates, cross-selling of products across a diverse customer base and a wider range of products in the housing finance sector. Apart from the merger, HDFC Bank also witnessed a loan book growth of 20.9% YOY basis to RS 13.7 lakh crore as of March 31 2022.

At the closing bell share price of HDFC Bank Limited was 148.80 points higher at Rs 1654.80 (9.88% higher). The 52-week high was 1725 and the 52-week low was 1292.