InvestorQ : Why is the stock market so excited about IDFC?
Debbie Mascarenhas made post

Why is the stock market so excited about IDFC?

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Arti Chavan answered.
5 months ago
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The stock of IDFC, the holding company of IDFC First Bank, was up nearly 19% on Thursday, 22 July. In fact, the stock traced a 52-week high of Rs.62.60 after the RBI allowed IDFC to exit as the promoter of IDFC First Bank. It may be recollected that recently RBI had clarified that holding companies of banks can exit their banking ownership after completion of 5-year lock in. Since IDFC Bank commenced operations in October 2015, five years are over.

Currently IDFC owns 36.6% in IDFC First Bank, which was formed by the merger of IDFC Bank and Capital First in 2018. However, IDFC has not mentioned about its intent to exit IDFC Bank and looks like it could continue for now. However, investors are betting that now IDFC can be absorbed into IDFC Bank through the process of reverse merger. This will enhance group value and also save IDFC from the typical holding company discount.

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