Share prices of HDFC Bank and HDFC Ltd jump after merger announcement

Early morning trade on Monday saw monumental jumps in the share prices of HDFC Bank Housing Development Finance Corporation Ltd or HDFC Ltd. 

While Housing Development Finance Corporation Ltd or HDFC Ltd’s share price jumped 13 percent, HDFC Bank’s share price soared 10 percent in early morning trade. 

Specifically, HDFC Bank’s share price on the Bombay Stock Exchange (BSE) went up by over 13 percent to Rs 1712.45/-. On National Stock Exchange (NSE), HDFC Bank’s share price went up by 13 percent to Rs 1702/-. 

Hdfc

Similarly, the share price of Housing Development Finance Corporation Ltd or HDFC Ltd went up by over 15 percent to Rs 2818.55/- on BSE. Its share price on NSE rose by 15 percent to Rs 2820/-. 

Investors can ascertain and verify them on the BSE and NSE websites. 

This sudden jump in the share prices of both companies comes after news about their merger broke out in public. 

Both companies announced recently that HDFC Bank and Housing Development Finance Corporation Ltd or HDFC Ltd would merge to create a financial services conglomerate, as reported by Reuters.  

As per the recent deal between both entities, shareholders of HDFC Ltd will receive 42 shares of the HDFC bank for every 25 shares held. Other Existing shareholders of HDFC Ltd will collectively own a 41 percent stake in the HDFC Bank. 

Shares held by the housing finance company in the lender will be extinguished, making HDFC Bank a full-fledged public company. 

Regarding the upcoming merger, HDFC Ltd Chairman Deepak Parekh said, “The resulting larger balance sheet would allow underwriting of large ticket infrastructure loans, accelerate the pace of credit growth in the economy, boost affordable housing and increase the quantum of credit to the priority sector.”  

However, the planned merger is yet to get approval from the competition commission of India (CCI), the statutory entity that regulates market competition. 

It may also be noted that as of Friday, HDFC Bank had a market value of over 8.34 trillion rupees (US$110.06 billion), while HDFC Ltd’s worth was over 4.44 trillion rupees or US$58.59 billion.  

HDFC bank also happens to be India’s largest private bank by assets. It is also the third-largest Indian company by market capitalization of $122.50 billion on the Indian stock exchanges. Further, HDFC is also the fifteenth largest employer in India, with nearly 120,000 employees, as reported by Macro trends. 

Notably, the upcoming merger with HDFC Ltd will not be the first merger of HDFC bank. In February 2000, it had merged with the Times Bank in February in what became the first merger of two private banks in the category of new generation private sector banks posted liberalization of the Indian economy in 1992.  

Times Bank, which merged with the HDFC bank, was created as the Times Group, formally known as Bennett, Coleman and Co. Ltd. Tata Group is one of the largest media conglomerates. 

In 2008, HDFC bank acquired the Centurion Bank of Punjab for Rs 95.1 billion after approval from HDFC Bank’s board. At the time of the said acquisition, it became one of India’s largest mergers in the financial sector. 

In 2021, the HDFC bank acquired a 9.99% stake in FERBINE, an entity promoted by Tata Group. With this latest acquisition, HDFC aimed to create a Pan-India umbrella entity for retail payment systems like the National Payments Corporation of India (NCPI). 

A few months back, in September 2021, HDFC and Paytm partnered with global card network Visa to launch a range of credit cards for Indian consumers. 

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