Bharat Financial surges 7%, IndusInd Bank falls 3% on merger talks report

NEW DELHI: Shares of Bharat Financial Inclusion climbed over 7 per cent while those of IndusInd Bank tumbled nearly 3 per cent after ET NOW reported that the two financial institutions were in talks for a possible amalgamation in a share swap deal.

“M&A has been very depressed for the past few years. The last time you had high M&A activity was in 2007. Valuations are actually quite attractive relative to the growth prospects. Growth is turning and the confidence is coming back. Free cash flow in the corporate sector has turned positive for only the second time in two decades,” said Ridham Desai at Morgan Stanley.

Following the report, shares of Bharat Financial Inclusion jumped 6.56 per cent to hit a high of Rs 853.90 on BSE. The news though did not go down well with IndusInd Bank’s investors, as shares fell 2.68 per cent to Rs 1,273.

The exchange has sought clarification from both the companies regarding the same. The reply is awaited.

“You are going to see more and more M&A deals come through. I will make that broad comment. I do not want to get into the specific IndusInd case, but this is just the beginning of what is going to be a fairly big M&A cycle in India,” Desai said.