After the RBI authorizes the merger with IDFC, IDFC Financial Holding, shares of IDFC First Bank increase by 3%

 After the RBI authorizes the merger with IDFC, IDFC Financial Holding, shares of IDFC First Bank increase by 3%

RBI said it had "no objection" to the merger plan as a whole.

The Reserve Bank of India (RBI) authorized the merger of IDFC and IDFC Financial Holding Company on December 19, which caused shares of IDFC First Bank to rise 3% to the day's high of Rs 92.33 per share.

The private sector lender's stock has increased by more than 6% over the last month, while the benchmark Sensex has increased by 8%. Prior to this, on September 5, 2023, shares of IDFC First Bank reached a 52-week high of Rs 100.74 per share.

In accordance with the exchange filing, RBI has said that, if the terms and circumstances outlined therein are met, it has "no objection" to the overall merger plan.

As per the filing, the plan is contingent upon obtaining many legislative and regulatory approvals, including as the permission of the National Company Law Tribunal and the respective shareholders of the firms that are part of the scheme.

Prior to this, the lender had announced robust loan growth in the July–September quarter of 26.1% year over year, mostly due to house loans, auto loans, and rural financing.

Since we anticipate further strong growth in H2FY24, we have revised our projections for future growth and have valued the bank at 1.9x FY25E ABV. In a previous note, analysts at Axis Securities had said, "We believe advance growth will be better in H2FY24," given the holiday season in H2FY24 and H2's historically better than H1.