IDFC First Bank shares rise after IDFC announces plans to complete merger in FY23

Petrochemical stock surges

As parent company IDFC Ltd. declared its intentions to complete the merger with its affiliate during the current fiscal year, barring unforeseen circumstances, shares of private sector lender IDFC First Bank increased 1.38 percent to 55.05 per share during Tuesday’s early trade.

According to IDFC, the corporate simplification process has reached its conclusion. The company’s merger with IDFC First Bank is the next phase, it was said.

“We want to let you know that the Corporate Simplifications process has reached its conclusion. The merger with IDFC FIRST Bank Limited is the next phase, according to a filing from IDFC Ltd.

On the NSE, shares of IDFC Ltd were also up 2.61 percent, trading for 78.60 each.

According to IDFC First Bank, the board has designated Axis Capital Ltd to provide a fairness opinion on the share exchange ratio related to the merger with IDFC First Bank.

The company announced the appointment of Cyril Amarchand Mangaldas – Law Firm to do legal due diligence, create and finalise the amalgamation plan, and submit regulatory applications.

ICICI Direct expects the shares of IDFC First Bank to rise in the near future.
The brokerage company ICICI Direct is bullish on IDFC First Bank in the private banking sector and anticipates that the stock will perform well in the coming months.

“IDFC First Bank has been doing a good job of following its instructions in all areas. With the balance sheet reform virtually complete, the goal is on accelerating expansion by entering new markets (digital, gold, personal loans, and credit cards). Improvement in the CI ratio from the present 73.3% to the planned 55% in FY25E is a crucial factor in driving additional improvement in return ratios. Strong retail execution, stable credit costs, and increasing efficiency ought to support RoE at 10-12% in FY24–25E, according to the note.

“We anticipate that the stock will resume its upward trend after taking a three-month break, moving towards our target price of 64, which is the December 2022 high. The weekly stochastic oscillator, one of the oscillators, is recovering from oversold position and has produced a buy signal, reinforcing the optimistic bias, the brokerage stated.