How the mega-merger of HDFC-HDFC Bank will benefit investors, customers and banking
PremiumHDFC-HDFC Bank merger: According to several analysts, this merger will be beneficial for investors, customers as well as the banking system
The unexpected announcement of HDFC and HDFC Bank’s merger took everyone by surprise. The Equity markets, on its part, gave thumbs up to the biggest corporate news for the year. According to several analysts, this merger will be beneficial for investors, customers as well as the banking system.
“The merger will create value for shareholders, and employees as the combined entity will create an increased scale of business, new product lines, a strong balance sheet ad provide efficient utilization of resources. Shareholders will benefit from the better economies of scale and better business combined with reduced costs, thus impacting the earnings per share," said Manoj Dalmia, Founder and Director at Proficient Equities Private Limited.
The mega-merger definitely will benefit both investors and the banking system.
“From investors' point of view, we see there will be more products available for a combined activity to sell which will help increase EPS," said Ravi Singhal, Vice Chairman, GCL Securities Limited
He added that the long-term investors will get benefited from this largest transaction in the nation's corporate history.
According to Dalmia, the deal will benefit the banking system as it will give rise to better credit ratings.
“The inflow of investments due to larger underwriting power, and assets, will give rise to better credit ratings.HDFC is one of the top issuers of the local corporate bond market and HDFC Bank mostly issued tier-II bonds. After this merger, the entity will be capped as BFSI which might bring some regulatory issues but they are expected to be solved," said Dalmia.
Ravi Singhal said that if we see as per banking system the number of branches and workforce will increase resulting in growth and productivity
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HDFC Bank is showing a bullish trend on major momentum indicators like RSI, MACD, Williams and 200 DMA. “The surge in volume and a breakout above its strong resistance of 1525 levels has confirmed the bullish formation in the counter. With this thrust, HDFC Bank may touch the levels of 1850 in near future," said Ravi Singh, Vice President and Head of Research, Share India.
HDFC Bank, HDFC merger deal
India's most valuable lender HDFC Bank on Monday agreed to take over the country's largest mortgage lender in a $40 billion deal. Making the announcement, HDFC Chairman Deepak Parekh said it is a ‘merger of equals’. "Our customers will be the biggest beneficiaries," Parekh told reporters.
Post-merger HDFC Bank will be twice the size of ICICI Bank, which is the third-largest bank now. The merger is expected to be completed by the second or third quarter of FY24, subject to regulatory approvals. The proposed entity will have a combined asset base of around ₹18 lakh crore.
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