On the first trading day after the HDFC-HDFC Bank merger became effective on the 1st of July, HDFC Bank shares spiked to hit a new high.
With the merger coming into effect, HDFC Bank will be 100% owned by public shareholders. Existing shareholders of HDFC will own 41% of the bank. Every HDFC shareholder will get 42 shares of HDFC Bank for every 25 shares they hold.
The board of directors of HDFC Bank in consultation with the board of directors of HDFC Limited has fixed July 13, 2023, for determining the shareholders of HDFC Ltd who would be issued and allotted the shares of HDFC Bank.
Foreign brokerage Morgan Stanley believes that the HDFC bank stock is a compounder at attractive valuations.
"The merger is synergistic. HDFC Bank gets access to secured and long tenor retail mortgage product as well as a large customer base. Its product suite – plus direct access to insurance and other subs – and geographical reach are superior to those of most private banks", says the brokerage report.
HDFC Bank is now ranked at the fourth position in terms of market cap, behind the likes of JPMorgan, Industrial and Commercial Bank of China, and Bank of America Corp, according to data compiled by Bloomberg.
Let's also look at largest banks in India in terms of market capitalisation.