HDFC Bank share price to remain in focus following merger with HDFC

HDFC Bank shares closed 1.51% higher at ₹1,701.75 apiece on BSE on Friday. According to analysts, HDFC Bank, post the corporate action the stock prices have seen a strong gap up opening and has crossed above its multiple month high, bias remains positive where the prices are likely to extend towards 1,850 and 1,670 as immediate support.

Although the share exchange between the owners of these two major companies is set to take place on July 13, 2023, the bank has emphasised that the merger only became effective on July 1. This means that starting on Monday of the next week and continuing through July 13, the trading window for HDFC Ltd will be closed.

According to an exchange filing, HDFC Bank reported on Saturday that the merger of HDFC Ltd. had been successfully completed, following the receipt of all necessary shareholder and regulatory clearances. Subject to receiving all required permits and approvals, HDFC Bank and HDFC Ltd. announced their intention to merge on April 4, 2022. They gave the merger process a 15–18 month completion window.

The merged entity inter-alia brings together significant complementarities that exist between both the entities and is poised to create meaningful value for various stakeholders, including respective customers, employees, and shareholders of both the entities from increased scale, comprehensive product offering, balance sheet resiliency and ability to drive synergies across revenue opportunities, operating efficiencies and underwriting efficiencies, said the bank in an exchange filing. 

As per the exchange filing, pursuant to the share exchange ratio as per the merger scheme, HDFC Bank will issue and allot to eligible shareholders 42 new equity shares of the face value of Re 1- each, credited as fully paid-up, for every 25 equity shares of the face value of ₹2- each fully paid-up held by such shareholder in HDFC Ltd. as on the Record Date i.e., July 13, 2023.

Speaking on the completion of the merger, Sashi Jagdishan, CEO & MD, HDFC Bank said, “This is a defining event in our journey and I’m confident that our combined strength will enable us to create a holistic ecosystem of financial services. We’re truly happy to welcome the talented team of HDFC Ltd. into the HDFC Bank family. I believe our journey will be defined by agility, adaptability, and a relentless pursuit of excellence. As we navigate the path ahead, we will embrace challenges as opportunities, learn from our experiences, and strive to be the benchmark of success and integrity in the financial services industry”.

As per an exchange filing, post the merger, HDFC Bank has no identified promoter. It also marks the transformation of HDFC Bank into a financial services conglomerate that offers a full suite of financial services, from banking to insurance, and mutual funds through its subsidiaries. So far, the Bank was a distributor for these products.

The merger of India’s largest Housing Finance Company, HDFC Ltd. with the largest private sector bank in India combines the strengths of a trusted home loan brand with an institution that enjoys a lower cost of funds. The larger net-worth would allow greater flow of credit into the economy. It will also enable underwriting of larger ticket loans, including infrastructure loans and contribute further to nation building and employment generation.

All employees of HDFC Ltd as on effective date become HDFC Bank employees. Over the past months, the Bank has been preparing for smooth integration not only of systems and processes, but also of all aspects that will make HDFC Bank a welcoming place of work for the employees from HDFC Ltd.

Post merger, the key HDFC Bank subsidiaries include HDFC Securities Ltd., HDB Financial Services Ltd., HDFC Asset Management Co. Ltd, HDFC ERGO General Insurance Co. Ltd., HDFC Capital Advisors Ltd. and HDFC Life Insurance Co. Ltd.

Updated: 03 Jul 2023, 08:59 AM IST