IDFC first bank V/s IDFC ltd

Seeing the present scenerio of reverse merger, I am not able to decide which among these two I should hold in my portfolio for a long term considering the fact that IDFC ltd is the holding company and market values it less and yet my Investment advisor suggested for IDFC ltd instead of Bank.

Please suggest.

Hello @Stevo,

I also read about the reverse merger and did some number crunching. In the past, I looked how ICICI Financial Holdings reverse merged into ICICI Bank and the bank’s shareholders gained disproportionately.

How? Say, a bank spent Rs. 1 for merging it’s holding co. whose realisable value after selling it’s MF business and other businesses, is Rs. 1.5. So, you pay Rs. 1 for Rs. 1.5 for FREE.

Got the point? Here, I believe IDFC FIRST Bank’s shareholders stand to gain and even more so, the old shareholders from Capital First times will gain even more in ‘intrinsic value’ of the business.

Nothing is 100% right in the market but I hope I could through some light.