Shares of Aditya Birla Capital gained nearly 4 percent at the opening on the NSE on March 12, a day after the board of directors of Aditya Birla Capital Limited approved the merger of Aditya Birla Finance Ltd with itself on March 11. The merger was announced post-market hours. At 9:20 am, the stock was trading at Rs 186.90
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In a regulatory filing, Aditya Birla Capital said that the board had "considered and approved" the amalgamation of Aditya
Birla Finance Limited is a wholly-owned subsidiary of the Company. "The Scheme inter alia provides for the amalgamation of the Amalgamating Company with the Company, and dissolution of the Amalgamating Company without winding up," the filing added.
Post amalgamation, Aditya Birla Capital will get converted from a holding company to an operating non-banking finance company (NBFC), the company said, creating a unified large entity with greater financial strength and flexibility enabling direct access to capital.
Aditya Birla Finance currently has total assets worth Rs 1,400 crore while Aditya Birla Capital Limited has total assets worth Rs 13,000 crore as of December 2023. Vishakha Mulye will assume the role of MD & CEO and Rakesh Singh will assume the role of Executive Director and CEO (NBFC) of the amalgamated company.
Morgan Stanley has given an equal-weight call for the stock with a target of Rs 196 per share. According to the brokerage, a tangible economic benefit is not material and may lower the holding company discount that could follow if the NBFC were to list by September 25. RBI approval for this merger will be key, the report added.
Jefferies has given the stock a buy call and raised the target price to Rs 225 per share. According to the brokerage, if approved, the scheme will simplify the corporate structure and will lift the CRAR by 150 bps.
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