Bandhan Bank: Merger update; Hold

Jainam Research | Jan. 9, 2019, 12:09 p.m.


Merger between Gruh Finance Ltd subsidiary of HDFC Ltd and Bandhan Bank approved by the board of directors on 7/01/19. Even after the merger promoters of Gruh and Bandhan has to reduce its stake in merged entity which might create panic in the market in future affecting share price. Merger would lead to rise in P/E and dilution of EPS of merged entity.Overall reduction in risk and diversified portfolio being plus point but over-valuation, pressure on NIM, SLR requirement etc, might affect negatively.So, due to some of the problems explained above it might create short-term panic in market but might be advantage in long-term. As we recommended before so we continue to “HOLD” shares of Bandhan and if price comes down we recommend to “BUY ON DIPS”.

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