Indiabulls Housing stock likely to witness near-term pressure

While the Street appreciates the retail strength of Lakshmi Vilas Bank, the housing finance major's capital crunch and asset quality are key concerns

Any merger in the banking sector entails near-term pain, but mostly ends up being value accretive in the long run. Same could be the case for Indiabulls Housing Finance, which on Friday last week announced a merger with Lakshmi Vilas Bank (LVB). 

The LVB stock has in the past week gained over 20 per cent on the likelihood of the transaction, which will lead to significant benefits for the private bank reeling under bad loan, capital and growth concerns.

Comparatively, the Indiabulls Housing stock hasnot been so brisk in the bourses, up 7 per cent in the past week, to Rs 903.15.