HDFC Life soars 8% as RBI allows HDFC Bank to increase stake beyond 50%

Shares of HDFC Life Insurance surged 8 per cent to Rs 554.60 on the BSE in Monday’s intra-day trade on the back of heavy volumes after the company said that the Reserve Bank of India (RBI) has allowed HDFC Bank or HDFC Limited to increase the shareholding in HDFC Life and HDFC ERGO to more than 50 percent prior to the effective date of the merger. HDFC Bank has received a letter dated April 20, 2023 from RBI on certain forebearances sought by it, in relation to the ongoing amalgamation of the HDFC Limited with and into HDFC Bank, HDFC Life said in an exchange filing. HDFC held 48.65 per cent stake in HDFC Life at the end of March 2023 quarter. HDFC holds 49.9 per cent in HDFC Ergo. RBI's permission to increase stake in subsidiaries puts an end to the overhang on the stock. “We believe this removes a key overhang on HDFC Life and could enable an additional buying of Rs 2,200 crore for HDFC Life. Further, investments of HDFC are allowed to continue as investments of HDFC Bank,” Motilal Oswal Financial Services said. At 09:32 AM; HDFC Life quoted 6 per cent higher at Rs 545.75, as compared to 0.15 per cent rise in the S&P BSE Sensex. The average trading volumes at the counter jumped over three-fold today. A combined around 7 million equity shares changed hands on the counter on the NSE and BSE so far.