HDFC Bank to replace HDFC on MSCI global standard index from July 13

HDFC and HDFC Bank completed their $40 billion merger – the largest in India’s corporate history on July 1 and have set July 13 as the ‘record date’ for shareholders to swap HDFC’s shares with those of HDFC Bank.

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The foreign shareholding in the combined entity would be at about 60 per cent-62 per cent, allowing the bank to be added to the MSCI index for the first time since 2013, according to news agency Reuters.

The share price of both companies declined in May after MSCI said that it would use an adjustment factor of 0.50 to compute the weightage of the merged entity, which Nuvama Research estimated would likely lead to a combined outflow of $150-$200 million, added Reuters.

Additionally, HDFC Bank will replace HDFC also on the FTSE All-World index from July 13, the global aggregator announced this week. HDFC Bank will be added to the index with a total of 3,082,056,076 shares, and an investability weighting of 95.98 per cent, said FTSE Russell said in a statement.

HDFC Bank will remain a part of the FTSE MPF-All World, FTSE Global Large Cap, and FTSE Emerging indices, while HDFC will be deleted from these indices. HDFC will also be deleted from All-World Comprehensive Factor, All-World ex CW Balanced Factor, and All-World ex-CW Climate Balanced Factor indices, the said the index aggregator. 

With the merger, all HDFC Ltd shareholders will get 42 shares of HDFC bank, for every 25 shares held in HDFC Ltd. Post the merger, HDFC bank will continue being the second largest bank in India, after State Bank of India (SBI), along with being the country’s biggest private bank.

The joint market cap of HDFC Bank will be ₹14,73,953 crore with the merger, which is higher than that of Tata Consultancy Services or TCS at ₹12,07,669.91 crore. So, in terms of market capitalisation, HDFC Bank will become second most valuable Indian company after Reliance Industries Ltd.

Notably, HDFC Bank’s managing director and chief executive Sashidhar Jagdishan said that the bank aims to double every four years. In a letter to the over 4,000 employees from HDFC who joined the bank’s rolls on July 1, Jagdishan said the future is bright, and the work on realising the potential of the merger starts now.

“The runway for financial services and mortgage, which are so underserved and under penetrated, is going to be very large. HDFC Bank – the combined entity – with a large and growing distribution and customer franchise, more than adequate capital, healthy asset quality and profitability, will be best positioned to capture growth. The pace at which we aim to grow – we could be creating a new HDFC Bank every four years,” he said.

HDFC Bank’s shares are up two per cent so far this year, while HDFC’s shares have gained five per cent, but are both underperforming the blue-chip Nifty 50. On July 7, shares of HDFC Bank settled 0.84 per cent lower at ₹1,660.75 compared to a previous close of ₹1,674.75 apiece on the BSE. 

Updated: 07 Jul 2023, 07:53 PM IST