IDFC First Bank shares rise after IDFC announces plans to complete merger in FY23
1 min read 21 Mar 2023, 12:09 PM ISTAxis Capital Ltd has been appointed for fairness opinion on the share exchange ratio
PremiumShares of private sector lender IDFC First Bank rose 1.38 per cent to ₹55.05 apiece during Tuesday's early trade after parent IDFC Ltd announced its plans to complete the merger with its unit during the current fiscal, barring unforeseen circumstances.
IDFC said that it has completed all stages of corporate simplifications. It added that the next step for the company is the amalgamation with IDFC First Bank.
“We wish to inform you that all the stages of Corporate Simplifications have now been completed. The next step is the Amalgamation with IDFC FIRST Bank Limited," IDFC Ltd said in a filing.
Meanwhile, shares of IDFC Ltd were also trading 2.61 per cent higher at ₹78.60 apiece on the NSE.
The board has appointed Axis Capital Ltd for issuance of fairness opinion on the share exchange ratio with respect to the merger with IDFC First Bank, IDFC said.
“Appointment of Cyril Amarchand Mangaldas - Law Firm for conducting legal due diligence, drafting and finalizing scheme of amalgamation and filing regulatory applications," the company said.
ICICI Direct sees IDFC First Bank stock to outperform in near term
Within private banking space, brokerage house ICICI Direct is positive on IDFC First Bank, which it expects to outperform over the next few months.
“IDFC First Bank has been delivering well on its guidance across parameters. With balance sheet restructuring largely done, pedalling growth with entry in new segment (digital, gold, personal loans and credit cards) is in focus. Key variable to drive further improvement in return ratios is improvement in CI ratio from current 73.3% to targeted 55% in FY25E. Thus, strong retail execution, steady credit cost and improving efficiency should drive RoE at 10-12% in FY24-25E and thus valuation," the note said.
“We expect the stock to resume up move after last three months breather and head towards ₹64 levels (target price) as it is the high of December 2022. Among oscillators, the weekly stochastic is rebounding from the oversold territory and has generated a buy signal, thus validating positive bias," the brokerage said.
