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MUMBAI: Will HDFC Bank move up the valuation ranks on Monday? It is currently the 11th biggest lender globally in terms of market capitalisation. Markets will determine the post-merger value of the bank on Monday as securities issued in lieu of HDFC shares get listed on the exchanges.
HDFC Bank is also set to announce its results for the first quarter of FY23 on Monday, which will indicate the merger’s cost on the bank’s profit.
As part of its merger with the bank, mortgage lender HDFC’s shares stopped trading on Wednesday nearly 44 years after they were listed on stock exchanges. In a letter to shareholders, HDFC Bank said it has completed the allotment of equity shares to its shareholders in accordance with the amalgamation scheme.
Although the HDFCHDFC Bank merger was completed on July 1, the impact of the merger on the valuation could not be decided as shares of HDFC continued to trade until July 12 ahead of the July 13 record date.
HDFC’s market cap was just over Rs 5 lakh crore on Wednesday, while HDFC Bank’s value was Rs 9. 2 lakh crore as of Friday. However, simply adding the market cap of the two entities will not give an indication of the merged company’s value as HDFC’s shareholding in the bank would be cancelled leading to a 21% reduction in equity.
What remains to be seen is whether the reduction in equity is made up by higher valuation because of the increase in earnings per share. Markets are also likely to factor in the reduction in holding company discount.
The payment in respect to fractional entitlements will be made to shareholders’ bank accounts.
HDFC Bank is also set to announce its results for the first quarter of FY23 on Monday, which will indicate the merger’s cost on the bank’s profit.
As part of its merger with the bank, mortgage lender HDFC’s shares stopped trading on Wednesday nearly 44 years after they were listed on stock exchanges. In a letter to shareholders, HDFC Bank said it has completed the allotment of equity shares to its shareholders in accordance with the amalgamation scheme.
Although the HDFCHDFC Bank merger was completed on July 1, the impact of the merger on the valuation could not be decided as shares of HDFC continued to trade until July 12 ahead of the July 13 record date.
HDFC’s market cap was just over Rs 5 lakh crore on Wednesday, while HDFC Bank’s value was Rs 9. 2 lakh crore as of Friday. However, simply adding the market cap of the two entities will not give an indication of the merged company’s value as HDFC’s shareholding in the bank would be cancelled leading to a 21% reduction in equity.
What remains to be seen is whether the reduction in equity is made up by higher valuation because of the increase in earnings per share. Markets are also likely to factor in the reduction in holding company discount.
The payment in respect to fractional entitlements will be made to shareholders’ bank accounts.
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