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Mega-Merger of HDFC Twins Can Form One of the Biggest Banks in the World

07 February 20244 mins read by Angel One
Mega-Merger of HDFC Twins Can Form One of the Biggest Banks in the World
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One of the country’s largest private sector banks and top housing finance company has successfully brought their board members on board for an all-stock amalgamation on Monday, 4 April 2022. Thus, soon HDFC Bank Limited will be taking over HDFC Limited.

Stick to this piece to learn more about the mega-merger of these twins!

A Closer Look into the Transaction Made for HDFC Twins Merger

For a long time, HDFC has been planning this merger. Now, finally, after getting the all-stock amalgamation approval, it has sealed its transaction for $ 40 billion. HDFC and two of its subsidiaries currently own 21% of HDFC bank. After this merger, the shares of HDFC will be extinguished.

This HDFC twins merger includes two steps. In the first step, a merger of two wholly-owned subsidiaries of HDFC, i.e., HDFC Holdings Ltd. and HDFC Investments Ltd., will take place. Thereafter, HDFC Limited will be merged into HDFC Bank Limited.

This entire process must be completed in 15 to 18 months. Till then, both the companies will operate as two different entities.

Know About the Share Value Before and After Amalgamation

The amalgamation of Housing Development Finance Corporation Limited into HDFC Bank Limited involves a share exchange ratio of 42 shares of Re. 1 face value apiece for every 25 paid-up shares of the parent company at face value of Rs. 2 per share.

What Do Analysts Say About This Merger?

HDFC-HDFC Bank merger has a positive effect on the market as per the analysts. As a result, there is an increase of 9.3% in the stock price of HDFC Limited. At the same time, the stock price of HDFC Bank Limited has risen by 10%.

The experts also believe that requirements of this priority lending sector, including CRR & SLR requirements, will be a go on for its subsidiary after this twin merger.

Even Sashidhar Jagdishan, the Chief Executive Officer of HDFC Bank, strongly believes this acquisition will not affect flexibility.

Bottom Line

From the above information, it is clear that the HDFC twins merger will positively affect the company stock. In fact, as per the experts’ analysis, both entities have already experienced a rise in their stock, and they will further grow in the future.

So, after running comprehensive research on company valuation, vision and mission, if an investor plans to invest in HDFC, they can open their Demat account through the Angel One platform with minimum effort. The process is easy and saves time.

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Disclaimer: This blog is exclusively for educational purposes and does not provide any advice/tips on investment or recommend buying and selling any stock.


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