Last updated: July 17, 2023, 1:52 PM IST
HDFC Bank Merger: HDFC Ltd, HDFC Bank on Monday joined the exclusive club of companies with a market cap of $100 billion. This makes it the seventh largest lender in the world.
Trading at a market value of about $151 billion or Rs 12.38 lakh crore, it is now the world’s seventh largest lender bigger than giants like Morgan Stanley and Bank of China.
HDFC Bank is behind JPMorgan ($438 billion), Bank of America (232 billion), China’s ICBC ($224 billion), Agricultural Bank of China ($171 billion), Wells Fargo ($163 billion), and HSBC ($160 billion). ).
The merger of HDFC Bank and its parent company HDFC Ltd was completed on 1 July. Today was the first day that the bank’s shares began trading as a merged entity.
On 13 July, shares of HDFC Ltd were delisted as 12 July was the record date for determining the shareholders eligible for share allocation.
On Friday, the bank allotted 3.11.03.96.492 new shares of par value Re 1 each to eligible shareholders of HDFC Ltd. As part of the deal, each HDFC shareholder received 42 shares of HDFC Bank for every 25 shares they held in the company.
Accordingly, the paid-up share capital of the bank increased from 559,17,98,806 shares to 753,75,69,464 shares.
In terms of market value on BSE, HDFC Bank remains the third largest Indian company behind only Reliance Industries (Rs 18.6 trillion) and TCS (Rs 12.9 trillion).
“Within this esteemed group (with a market cap of $100 billion), it also offers some of the best earnings growth (17-18%) and return on equity (15%) metrics, making it relevant to global portfolios. It has the ability to leverage a large customer base, group links to deepen customer-customer relationships and generate revenue,” said Jefferies analysts Prakhar Sharma and Vinayak Agarwal.
The foreign brokerage firm has resumed coverage on HDFC Bank with a BUY rating and a target price of Rs 2,100.
“Merger broadens lending and cross-selling opportunities, especially in mortgages, insurance, MFs. Deposit mobilization should drive success and the bank is seeing early success with branch expansion. We forecast a profit CAGR of 17% over FY23-26, ROA of 1.9% and ROE of 16% in FY25. The risk comes from a spike in rates and lower PSLs,” Jefferies said.