IDFC First Bank shares rise 3% after RBI clears merger with IDFC Fin Holding; Should you buy?

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IDFC First Bank's shares rose over 3 percent, reaching a day's high of ₹92.33 per share on December 19, following the Reserve Bank of India's (RBI) approval of the merger between IDFC and IDFC Financial Holding Company with the bank. Over the last month, the stock of this private sector lender has shown a growth of over 6 percent, slightly trailing the 8 percent rise in the benchmark Sensex. Previously, IDFC First Bank's shares had achieved a 52-week high of ₹100.74 per share on September 5, 2023.

As per the filing with the exchange, the Reserve Bank of India (RBI) expressed its approval for the composite scheme of amalgamation, contingent upon adherence to the specified terms and conditions. "The scheme remains subject to various statutory and regulatory approvals inter-alia including approvals from the National Company Law Tribunal and the respective shareholders of the companies involved in the scheme," the filing read. The merger is contingent upon obtaining statutory and regulatory approvals from the National Company Law Tribunal, as well as the approval of the respective shareholders of the companies involved, as stated by the bank.

The merger was announced on July 3 and will see IDFC First Bank issuing 155 shares against every 100 shares of IDFC. Previously, the financial institution had disclosed a strong momentum in loan growth, registering an impressive 26.1 percent year-on-year increase in the July-September quarter. This notable growth was predominantly propelled by advances in home loans, automotive financing, and rural finance.