What happens when two ‘Vishal' take the ‘place' of meeting together? Well, they then become a ‘super giant' together.
And something similar is going to happen in Market My, where mortgage lender Housing development Finance Corporation ie HDFC Ltd, and HDFC Bank Ltd are going to merge.
Yes, this is unexpected news, as soon as came to the market today, felt as if once again wanted a wave of positivity. As soon as this news came, there was optimism and confidence in not only HDFC Limited and HDFC Bank Limited but also in the fast-growing Balki Nifty and Sensex. No wonder, these two were once 2% plus mine today.
Come let's see why this merger is happening? What are the advantages and disadvantages of mergers? Is the banking sector really under any pressure? Now is the right time to buy HDFC stock
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Let's see some recent figures from HDFC Bank
According to HDFC Bank, as of March 31, 2022, its advances grew by 20.9% year-on-year (YoY) and 8.6% sequentially to Rs 13.69 lakh crore. Bank deposits grew 16.8% year-on-year and 7.8% sequentially to Rs 15.59 lakh crore.
Now, HDFC Bank deposits growth is at its best in 5 quarters and advances growth is highest in 7 quarters on a yo-y basis.
According to the bank's internal business classification, retail credit grew by about 15 per cent on March 31, 2021, and by about five percent on December 31, 2021; Commercial and rural banking credit grew by about 30.5 percent on March 31, 2021, and by about 10 percent on December 31, 2021. Its corporate and other wholesale loans grew by about 17.5 percent as of March 31, 2021, and about 11.5 percent over the previous year. 31st December 2021.
After the merger with its parent company, HDFC Bank will become a powerhouse in the Indian banking industry. After this merger, HDFC Bank will also be able to easily build its housing loan portfolio and will also be able to increase its existing customer base.
Yet, Deepak Parekh, Chairman, HDFC Ltd. has said, ‘This transformative merger is a merger of equals!' The board says that due to RERA, and many government initiatives and implementation, now the housing finance business will run faster.
He says that
“HDFC-HDFC Bank merger will reduce single product exposure, enhance the asset diversity of the combined entity. The combined entity will be in a position to offer basically mortgage products versus the current assignment route.”
After this merger, HDFC Bank will be 100% owned by the public shareholders. In addition, the existing shareholders of HDFC Ltd will hold a 41% stake in HDFC Bank Ltd. According to HDFC, its shareholders will get 42 shares of HDFC Bank for every 25 shares held by the non-banking lender.
While this merger seems to be quite transformative, it is also pointing towards the unprecedented growth of the banking segment – so what, this merger is happening because the board members know that I am in the banking sector? Then they are feeling that going forward their profits will decrease in the banking segment?
Now the question is, should you in HDFC invest?
HDFC rose some 14% and HDFC Bank 10% after the news of the merger.
Simply put, the company is working out its operational costs from the ISS merger, and in doing so its profits are bound to go up. All analysts are giving positive signals about the merger and say that it is a win-win situation for the shareholders.
In the words of an analyst, the merger would be more beneficial for HDFC Ltd as it has lower profits and could increase the reach of its product with HDFC Bank.
Another said, “While the markets have given an encouraging response to this news, we believe that HDFC Bank's earnings may be downgraded in the near term and the management will continue to prove the upside of the merger through operational performance.” will be on.
If you want to have HDFC in your portfolio, then once again it is fundamentally and technically involved in proper analysis. HDFC is a profit-making company but an investor can make a profit only when they enter at the right timing – so please check whether this is the right time to enter or not before investing. And on this basis, you make your investment.
If you already have this stock, then many analysts say that such shares should definitely be bought in the ‘dip'.
Going forward, what will explode this merger is unknown, but the threat that it brought to the market today is commendable – the time of the market has changed at once, the situation has changed and the sentiments of all the investors. And changed the portfolio too…