Shares of IDFC First Bank fall 6% on share swap offer

On Tuesday, the shares of IDFC First Bank dropped to 6% on the day's low at Rs 77.10, as the share swap deal with parent IDFC appeared skewed in favor of the latter. IDFC shares were trading 0.6% higher at Rs 115.70 after hitting a 52-week high. IDFC shareholders would receive 155 shares from IDFC First Bank for every 100 shares held in the former. At Monday's closing price, the spread favours IDFC shareholders 16.3%. Nuvama Institutional Equities recommends all spread trade only when the spread has reached sufficient levels as per the merger closure timeline. IDFC First Bank is also among the top contenders for inclusion in the MSCI August 2023 standard index. At INR 81.7 shares, the stock needs more than a 4% hike to make the cut for the inclusion. Pagaria said the potential inflow could be $170 to $180 million, but that the merger won't impact its chances of inclusion in the global index. The only possible deterrent could be the stock not meeting the price cut-off level requirement, the analyst said. Completion of the merger, subject to approvals of various regulatory bodies, will take anywhere between 12 and 15 months. IDFC First Bank holds about 40% of IDFC First Bank's shares through IDFC Financial Holding. The IDFC is held by the public completely. IDFC First Bank had a total assets of 2.4 lakh crores and a turnover of 27,194 lakhs at the end of March. In the past 51 years, there has been a total of 51 crore transactions. The bank reported a net profit of Rs 2437.13 crore for the period July to September. IDFC had a total assets of 9,570, making it the largest bank in India. a turnover of Rs. 2,076 crore, and 64 Crores and a net profit of Rs. 64 Crores. The proposed merger would increase the overall book value per share of the bank by 4.9%. The bank has built a robust deposit franchise, which has grown at a CAGR of 36% in 4 years. IDFC First Bank is well-positioned to continue to grow in a profitable way. All stakeholders will benefit from such growth at the bank, resulting in an opportunity for value creation in the long term, the bank said.