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Bharat Financial hits 52-week high; IndusInd Bank dips 3% on merger

Bharat Financial Inclusion hits a 52-week high of Rs 1,047, up 4.4%, while IndusInd Bank dipped 3% to Rs 1,700 on the BSE in intra-day trade.

SI Reporter  |  Mumbai 

Bharat Financial hits 52-week high; IndusInd Bank dips 3% on merger

hit its 52-week high of Rs 1,047, up 4.4%, while dipped 3% to Rs 1,700 on the BSE in intra-day trade after the board of respective companies approved a of the two entities to create a stronger and more sustainable platform for financial Inclusion.

Upon the Scheme becoming effective, will stand merged into

“Bharat Financial Inclusion’s shareholders will receive 639 shares of IndusInd for every 1,000 shares of This implies a premium of 12.6% to over two-week volume weighted price (VWAP),” said in a statement.

The is expected to be value accretive from inception given IndusInd Bank’s lower cost of funds, ability to monetize excess PSL qualifying assets, efficient capital utilization and optimal resource utilization. Bharat Financial Inclusion’s distribution network also offers large untapped deposit potential from rural and underserved customers as also for their emerging banking needs, it added.

Analyst at IIFL Wealth Management believes that a with will uplift core operating profitability of IndusInd Bank, taking it well past the best in the industry.

Though the contribution of micro finance institutions (MFIs) loans will rise from current 2.2% to around 10%, the risk may not increase commensurately as is one of the most diversified MFI regionally and also operationally the most efficient. So the premium being paid to on the current valuation should not deject IndusInd Bank’s investors given significantly structural synergies to be realized from the transaction. Further, the proposed issuance of convertible warrants to promoters should provide comfort, the brokerage firm said in a note.

At 11:01 AM; was up 3% at Rs 1,034 on the BSE. was trading 2% lower at Rs 1,713, as compared to 0.15% rise in the S&P BSE Sensex.

First Published: Mon, October 16 2017. 11:05 IST
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