HDFC Bank Stock Rebounds After Initial Dip On Listing Of New Shares After Merger
Shares of the private lender pared the early losses and traded 0.36% higher at Rs 1,650.40 apiece.
Shares of HDFC Bank Ltd. rebounded after opening lower following the listing of new shares issued to Housing Development Finance Corp. investors as part of India's biggest corporate merger.
Shares of the private lender pared early losses to trade 0.36% higher at Rs 1,650.40 apiece as of 12:33 p.m., compared to a 0.42% rise in the benchmark NSE Nifty 50. The stock fell as much as 0.70% intraday. The relative strength index was at 50.44
Of the 46 analysts tracking the company, 45 maintain a 'buy' rating and one recommends a 'hold', according to Bloomberg data. The average 12-month consensus price target implies a potential upside of 22.1%.
HDFC Bank has become the fourth largest lender in the world by market value, according to a Bloomberg data. It's now fully held by public with no promoter.
HDFC Bank Ltd. is set to report its quarterly earnings for April-June today
HDFC Bank could report a revenue of Rs 31,137.3 crore and a net profit of Rs 11,375.1 crore in the quarter under review, according to the average of analysts' estimates calculated by Bloomberg.
And Thus Ends The Tale Of HDFC Ltd.
How Are The Shares Allotted
HDFC Bank allotted over 311 crore fresh equity to shareholders of HDFC as of the July 13 record date.
The new shares will be on equal footing with existing shares of HDFC Bank, according to an exchange filing by the lender on Friday. A shareholder got 42 shares of HDFC Bank for every 25 held in HDFC.
This would increase the paid-up share capital of HDFC Bank from Rs 559.2 crore to Rs 753.8 crore, following the cancellation of the promoter's holding of 116.4 crore shares.
HDFC Bank is set to report its quarterly earnings for April-June on Monday. According to the average of analysts' estimates calculated by Bloomberg, the lender could report a revenue of Rs 31,137.3 crore and a net profit of Rs 11,375.1 crore.
Jefferies On HDFC Bank
The research firm has resumed 'buy' rating with a target price of Rs 2,100, implying an upside return potential of 27.72%.
With the merger, HDFC Bank breaks into the $100 billion market cap club, becoming the seventh largest bank by market cap, Jefferies said in a July 15 note.
"At a truly global scale, we forecast it will be among the fastest-growing and top-ROE banks", it said.
HDFC Bank's merged business will have a tad lower net interest margins, offset by lower opex and credit costs.
The Bank has 80 million customers, and with the businesses of life/general insurance and AMC moving to be subsidiaries, HDFC Bank can offer better support to scale them, which will also enhance value.
"Over FY23–26, we expect the share of Casa deposits to grow at a 20% CAGR and the share in funds to rise to 34%", the note said.
Synergies from the merger with HDFC will arise from opportunities to cross-sell products, improve service, and improve operational efficiencies.
