HDFC shares rally 3% as traders look for arbitrage bets ahead of delisting

Shares of home loan provider HDFC, which has now been merged with HDFC Bank, rallied over 3% to Rs 2,911 in Monday's early trade on BSE even as traders saw arbitrage opportunities ahead of the announcement of the delisting date.

With investors raising a toast to the mega-merger deal that would lead to the creation of the world's fourth largest bank by market value behind only JP Morgan, ICBC of China and Bank of America, HDFC Bank shares also rallied over 2% to Rs 1,738.

"The merger of HDFC Bank and HDFC Ltd will create a behemoth (FY24 loans at Rs 25 tn, 15.7% market share) that can deliver strong growth (~17% loan CAGR) and profitability (~2% RoA). Better operating efficiency and benign credit costs should negate the drag from lower NIM," Axis Capital's Manish Shukla said.


With an incremental market share of 22-23% in loans and ~20% in deposits, the bank is expected to deliver loan growth of ~17% and deposit growth of ~19%.

The merger of HDFC with HDFC Bank came into effect on July 1. As part of the deal, HDFC shareholders will receive 42 new HDFC Bank shares for every 25 shares held by them.

Traders and institutional investors have been making arbitrage bets on HDFC as the share swap ratio benefits the parent company's shareholders.

The boards of both entities have set July 13 as the record date to determine the eligible shareholders for allotment of shares under the merger deal.

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