IDFC First Bank falls as merger ratio favours IDFC: Can the bank make it to MSCI index?

IDFC First Bank share price drooped over 5 percent on July 4 after the bank blazoned the share exchange rate for its junction with IDFC Ltd. Shareholders of IDFC Ltd will get 155 equity shares of IDFC First Bank for every 100 equity shares held.

As of July 3 ending price, IDFC shareholders are getting a decoration of 17 percent. The IDFC Ltd stock had formerly rallied 7 percent on Monday. This indicates a decoration of 24 percent grounded on Friday's( June 30) ending price.

As the threat- price rate is favourable for the parent, IDFC Ltd surged 2 percent on July 4 while IDFC First Bank fell 5 percent. At 1115 am, IDFC First Bank stock was quoting at Rs79.25 on the NSE, lower by3.25 percent from the former close. 

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presently, IDFC Limited through itsnon-financial holding company holds a39.93 percent stake in IDFC FIRST Bank. Post the junction, the book value per share of the bank would increase by4.9 percent, as calculated on audited financials as of March 31, 2023. 

Can IDFC First Bank make it to MSCI?

According to Nuvama Alternative Research, IDFC First Bank is the top probable contender for MSCI August 2023 Standard Index addition. still, the stock needs to rally near to 10 percent from current situations to touch Rs 85 per share by the third week of July.

" Only also can it make the cut for addition. This( price) is as per the rearmost global cut- off situations and please note cut- off situations keep changing on a diurnal base. The implicit flux could be$ 170 million to$ 180 million," Abhilash Pagaria, Head, Nuvama Alternative & Quantitative exploration said. 

The junction is anticipated to complete this time. As the junction progresses, the spread between the two stocks as per the rate is anticipated to contract, he added. 

“ We'll recommend any spread trade only when spread is at acceptable situations as per the junction check timeline," Pagaria said. 

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