Shares of IDFC First Bank (NASDAQ:FRBA) and its parent company, IDFC Limited, experienced a slight uptick in early trading today, following recent positive developments in their ongoing merger process. The enthusiasm in the market can be attributed to the series of approvals and clearances the proposed merger has received, along with strong financial results reported by IDFC First Bank for the second quarter of the fiscal year 2024.
The proposed merger between IDFC Limited and IDFC Financial Holding Company Limited into IDFC FIRST Bank Limited was decided in a board meeting on July 3. The agreed share-exchange ratio is set at 155 fully paid-up equity shares of IDFC First Bank for every 100 shares of IDFC Limited. This strategic move aims to streamline the group's structure.
On October 17, the Competition Commission of India (CCI) gave its nod to the merger, marking a significant step forward in the process. Following this approval, 'no objection' and 'no adverse observations' letters were received from the National Stock Exchange of India Limited and BSE Limited on November 13. The bank disclosed these milestones in a regulatory filing on Monday.
In addition to the merger-related news, IDFC First Bank reported robust financial results for the quarter ending September 2023. The bank's net profit soared by 35 percent year-on-year to ₹751 crore (INR100 crore = approx. USD12 million). A significant growth was also observed in its core operating profit, which surged by 38 percent to ₹1,456 crore. Furthermore, the net interest income grew to ₹3,950 crore with an improved net interest margin of 6.32 percent compared to 5.83 percent in the previous fiscal year.
Today's trading session saw IDFC First Bank's shares trading at ₹87.10, while IDFC Limited's shares reached ₹120.45 around 09:50 am IST, reflecting nearly 1 percent and 1.3 percent increases, respectively. Market sentiment has been buoyed by the progress in the merger proceedings. The bank's promising performance and potential growth prospects led Anand Rathi to feature IDFC First Bank in their Diwali Picks for potential high returns.
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