Arihant Capital's research report on HDFC Bank
HDFC Ltd’s board has announced its merger with HDFC Bank subject to necessary approval. The share swap ratio is 42 shares of HDFC Bank for every 25 shares of HDFC and merger is likely to be closed over the next 16-18 months (by Q3FY24). Based on pro-forma Dec’21 numbers, merger is ~3% EPS-accretive and ~8% BVPS-accretive for HDFC Bank. The combined entity will have advances book of INR 17,86,669 cr (HDFC AUM: INR 525,806 cr and HDFC Bank advances of INR 12,68,863 cr). This merger will enhance the value proposition and customer experience for the combined entity. The combined entity will benefit from HDFC Ltd’s expertise in specific lending businesses with low cost to income ratio.
Outlook
We revise our rating on the stock to ‘Accumulate’ from ‘Buy’ with a target price of INR 1,910 (unchanged), based on 3.6x FY24E P/ABV .
More Info
At 16:01 hrs HDFC Bank was quoting at Rs 1,656.45, up Rs 150.15, or 9.97 percent.
It has touched an intraday high of Rs 1,721.85 and an intraday low of Rs 1,562.30.
It was trading with volumes of 3,684,112 shares, compared to its thirty day average of 358,732 shares, an increase of 926.98 percent.
In the previous trading session, the share closed up 2.47 percent or Rs 36.35 at Rs 1,506.30.
The share touched its 52-week high Rs 1,724.30 and 52-week low Rs 1,292.00 on 18 October, 2021 and 08 March, 2022, respectively.
Currently, it is trading 3.93 percent below its 52-week high and 28.21 percent above its 52-week low.
Market capitalisation stands at Rs 918,591.13 crore.
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