FTSE Russell Keeps IDFC First Bank's Weightage Unchanged Post IDFC's Merger With Lender

FTSE Russell on Monday said it has retained IDFC First Bank Ltd. in the FTSE Emerging Comprehensive Factor Index with the existing investability weightage following the merger of its parent entity, IDFC Ltd., into it.

"IDFC First Bank will remain in the index with an unchanged shares in issue total of 7,477,996,039, an unchanged investability weighting of 49% and an unchanged weight adjustment factor of 0.390241516239705," the index aggregator said in a release.

"IDFC will be deleted from the index at the last traded price," it added.

The merger of IDFC into its banking subsidiary, IDFC First Bank, came into effect on Oct. 1.

"Although the merger is for stock terms, no change will be made to the shares or free float of IDFC First Bank," FTSE Russell said. The acquiring company is not issuing new shares as part of the merger transaction and as its investability weightage, i.e., 49%, "already reflects its foreign ownership restriction,"  it added.

"Any subsequent update to the acquiring company coming as a result of this action will be reflected at the next index review," the index aggregator added.

The boards of IDFC First Bank and IDFC had first approved the merger scheme in July 2023. This was followed by the Reserve Bank of India's approval of the scheme in December 2023. In May this year, most shareholders of IDFC First Bank gave their consent to the merger. The final approval was secured with the National Company Law Tribunal's clearance last month.

As part of the reverse merger plan, IDFC shareholders will receive 155 shares of IDFC First Bank for every 100 shares they hold in IDFC. Both IDFC and IDFC First Bank shares have a face value of Rs 10 each.

Shares of IDFC First Bank closed 0.54% higher at Rs 72.2 apiece on the NSE, compared to a 0.87% decline in the benchmark Nifty 50. Year-to-date, the stock is up 18.7%.

Out of 21 analysts tracking the stock, 12 have a "buy" rating, seven suggest to "hold" and two recommend to "sell", as per Bloomberg data. The average of 12-month analysts' price target implies a potential upside of 17%.