Shares of AU Small Finance Bank Ltd. declined over 8% after its board approved the merger with IPO-bound Fincare Small Finance Bank.
"It is hereby informed that the board of directors of AU Small Finance Bank Ltd., at its meeting held today on Oct. 29, 2023, has, inter alia, considered and approved the scheme of amalgamation for the amalgamation of Fincare Small Finance Bank Ltd. into and with AU Small Finance Bank Ltd," the company said in an exchange notice.
As part of the merger, shareholders of Fincare Small Finance Bank shall receive 579 equity shares of AU Small Finance Bank for every 2,000 shares held. The transaction is subject to approval from the Reserve Bank of India and the Competition Commission of India.
The appointed date for the amalgamation is set for Feb. 1, 2024.
Shares of the company fell as much as 8.65% to Rs 630.40 apiece. The stock is trading 7.09% lower at Rs 641.20 apiece, compared to a 0.18% advance in the benchmark NSE Nifty 50 as of 10:48 a.m.
It has fallen 2.43% on a year-to-date basis. The total traded volume so far in the day stood at 8 times its 30-day average. The relative strength index was at 22, implying that the stock may be oversold.
Thirteen out of the 29 analysts tracking the company maintain a 'buy' rating, eight recommend a 'hold' and eight suggest a 'sell,' according to Bloomberg data. The average of 12-month analyst price targets implies a potential upside of 18.8%.
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