Capital First advanced 1.21% to Rs 846 at 15:16 IST on BSE, with the stock trimming intraday gains after the boards of Capital First and IDFC Bank approved a merger of the former with the latter.
The announcement was made on Saturday, 13 January 2018.IDFC Bank tumbled 5.03% at Rs 64.25.
Meanwhile, the S&P BSE Sensex was up 241.33 points or 0.7% at 34,833.72.
On the BSE, 8.30 lakh shares of Capital First were traded on the counter as against the average daily volume of 1.15 lakh shares in the past two weeks. The stock had hit a high of Rs 902 so far during the day, which is a 52-week high. The stock hit a low of Rs 845.50 so far during the day. The stock had hit a 52-week low of Rs 584 on 23 January 2017.
The boards of Capital First and IDFC Bank at their respective board meetings held on Saturday, 13 January 2018, approved a merger of the former with the latter. Pursuant to the merger which is subject to regulatory and shareholder approvals, IDFC Bank will issue 139 shares for every 10 shares of Capital First.
Post merger, the combined entity of IDFC Bank and Capital First will have an assets under management (AUM) of Rs 88000 crore; PAT of Rs 1268 crores (FY 17); and a distribution network comprising 194 branches (as per branch count of December 2017 of both entities), 353 dedicated BC outlets and over 9,100 micro ATM points, serving more than five million customers across the country.
Vaidyanathan, currently Chairman and MD of Capital First, will succeed Dr. Rajiv Lall as MD and CEO of the combined entity upon completion of the merger and necessary regulatory approvals.
Shares of Capital First had witnessed a sharp rally ahead of the official merger announcement. The stock had rallied 15.24% in the prior five trading sessions to settle at Rs 835.90 on Friday, 12 January 2018, from its closing of Rs 725.30 on 5 January 2018.
Shares of IDFC Bank had rallied a whopping 25.27% to settle at Rs 67.65 on Friday, 12 January 2018, from its closing of Rs 54 on 2 January 2018.
The merger talks of Capital First and IDFC Bank were widely reported in the media circles as early as 9th January and 10th January 2018. Subsequently, in response to the clarification sought by the exchanges with regard to aforesaid news, Capital First in its clarification dated 11 January 2018, stated that it evaluates various opportunities on a continuous basis and the company, as the matter of policy, does not comment on market speculation. Capital First further stated that as on 11 January 2018, there was nothing which requires disclosure under the Securities and Exchange Board of India (Sebi) disclosure norms.
Capital First is a financial institution focused on providing debt financing to micro small and medium enterprises (MSME) and Indian consumers. On a consolidated basis, the company's net profit rose 36% to Rs 78.27 crore on 29.1% growth in total income to Rs 891.11 crore in Q2 September 2017 over Q2 September 2016.
IDFC Bank offers personal, business, wholesale banking solutions and wealth management services. The bank's net profit fell 39.7% to Rs 233.66 crore on 5.1% decline in total income to Rs 2365.06 crore in Q2 September 2017 over Q2 September 2016.
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