HDFC stock’s 45-year-old journey ends today. What's in store now?
Agencies
Synopsis
All existing monthly and weekly F&O contracts of HDFC will expire on Wednesday and shall be physically settled. All shareholders of HDFC will get 42 HDFC Bank shares for every 25 shares of its parent company.
Leaving investors nostalgic about its rich and glorious history, the 45-year-old journey of one of Dalal Street's top wealth creators is coming to an end today. Shares of home loan provider HDFC are getting delisted today following an all-stock reverse merger with subsidiary HDFC Bank.
“Shareholders holding less than 25 shares in HDFC will receive proportionate shares in HDFC Bank according to ratio, and a fraction, if any, will be extinguished and paid at the current market price,” said Ruchit Jain of 5paisa.com.
The mega-merger, which will lead to the birth of the world's fourth-largest lender by market capitalisation, will also trigger a reshuffle in Nifty.
With HDFC Bank's free float market capitalisation becoming higher than that of India's most valued company Reliance Industries (RIL), the private lender will end up commanding the largest pie of 14.43% in Nifty from tomorrow.
Like its parent entity, HDFC which got listed in 1978, HDFC Bank has also been one of the top wealth creators. Launched on 14th March 1995, HDFC Bank's Rs 50 crore-IPO was at an issue price of just Rs 10 and was oversubscribed 53 times.
HDFC Bank stock outlook
Analysts are unanimous that merger-related synergies will make HDFC Bank get access to secured and long-tenor retail mortgage products as well as a large customer base. "We expect merged loan growth to accelerate from 15-16% currently to 17-18% in four quarters, particularly as mortgage loan growth accelerates," Morgan Stanley analysts, including Sumeet Kariwala said.
JPMorgan has also resumed its coverage with an overweight rating on the counter saying that the merger is positive from a medium-term perspective. While Morgan Stanley has a target of Rs 2,110, JPMorgan's prediction is at Rs 2,000.
During the day, both HDFC and HDFC Bank stocks were trading higher by around 1% each.
On the daily charts, HDFC Bank stock has bounced back strongly from its 200-EMA placed at Rs 1,580 which is a sign of continued uptrend as well as strong support in the near term. The counter is trading in a 3-year ascending channel pattern and has gained strength from the lower band of the channel support implying the stock is poised for a strong upside.
“The stock witnessed a bullish MACD crossover recently which can push the price towards the Rs 1,720-1,740 zone which once sustained will trigger a breakout from cup and handle pattern which is a continuation pattern in nature with a likely target of Rs 2,000 in the coming months,” said Gaurav Bissa, VP, InCred Equities.
He suggests investors can buy HDFC Bank at current levels and on declines at Rs 1,600 for an upside till Rs 2,000 in the coming weeks. Traders should add HDFC Bank around Rs 1,600 with a stop loss of Rs 1,550 for an upside till Rs 1,720 level, the analyst said.
"Therefore, we are recommending a buy-on-dip strategy in HDFC Bank around Rs 1,570 or a fall in the price till Rs 1,540 levels can be used as a buying opportunity for the upside target of Rs 1,900," said Kunal N Kamble of Bonanza Portfolio.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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All existing monthly and weekly F&O contracts of HDFC will expire on Wednesday and shall be physically settled. All shareholders of HDFC will get 42 HDFC Bank shares for every 25 shares of its parent company.“Shareholders holding less than 25 shares in HDFC will receive proportionate shares in HDFC Bank according to ratio, and a fraction, if any, will be extinguished and paid at the current market price,” said Ruchit Jain of 5paisa.com.
The mega-merger, which will lead to the birth of the world's fourth-largest lender by market capitalisation, will also trigger a reshuffle in Nifty.
With HDFC Bank's free float market capitalisation becoming higher than that of India's most valued company Reliance Industries (RIL), the private lender will end up commanding the largest pie of 14.43% in Nifty from tomorrow.
Like its parent entity, HDFC which got listed in 1978, HDFC Bank has also been one of the top wealth creators. Launched on 14th March 1995, HDFC Bank's Rs 50 crore-IPO was at an issue price of just Rs 10 and was oversubscribed 53 times.
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HDFC Bank stock outlook
Analysts are unanimous that merger-related synergies will make HDFC Bank get access to secured and long-tenor retail mortgage products as well as a large customer base. "We expect merged loan growth to accelerate from 15-16% currently to 17-18% in four quarters, particularly as mortgage loan growth accelerates," Morgan Stanley analysts, including Sumeet Kariwala said.
Stocks Recommendations
JPMorgan has also resumed its coverage with an overweight rating on the counter saying that the merger is positive from a medium-term perspective. While Morgan Stanley has a target of Rs 2,110, JPMorgan's prediction is at Rs 2,000.
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During the day, both HDFC and HDFC Bank stocks were trading higher by around 1% each.
On the daily charts, HDFC Bank stock has bounced back strongly from its 200-EMA placed at Rs 1,580 which is a sign of continued uptrend as well as strong support in the near term. The counter is trading in a 3-year ascending channel pattern and has gained strength from the lower band of the channel support implying the stock is poised for a strong upside.
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“The stock witnessed a bullish MACD crossover recently which can push the price towards the Rs 1,720-1,740 zone which once sustained will trigger a breakout from cup and handle pattern which is a continuation pattern in nature with a likely target of Rs 2,000 in the coming months,” said Gaurav Bissa, VP, InCred Equities.
He suggests investors can buy HDFC Bank at current levels and on declines at Rs 1,600 for an upside till Rs 2,000 in the coming weeks. Traders should add HDFC Bank around Rs 1,600 with a stop loss of Rs 1,550 for an upside till Rs 1,720 level, the analyst said.
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Price-volume analysis indicates that buyers are keener to buy the Nifty heavyweight on dips."Therefore, we are recommending a buy-on-dip strategy in HDFC Bank around Rs 1,570 or a fall in the price till Rs 1,540 levels can be used as a buying opportunity for the upside target of Rs 1,900," said Kunal N Kamble of Bonanza Portfolio.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
