Equitas Holdings Ltd and Equitas Small Finance Bank (SFB) saw a tremendous rise on Tuesday. In fact, this acceleration was seen after the merger plan was approved by their respective boards. The stock of SFB had gained up to 10 per cent.
Equitas Small Finance Bank shares jumped 8.58 per cent and Equitas Holdings Ltd shares up to 10 per cent in intraday today. The share-swap ratio for Equitas Holdings shareholders has also improved following the new merger proposal.
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Merger got approval
According to exchange filings, the boards of these two companies in their respective meetings approved the plan for amalgamation between Equitas Holdings (Transfer Company) and Equitas Small Finance Bank (Transfer Company). Under this merger plan, shareholders of Equitas Holdings will be given 231 units of Small Finance Bank for every 100 shares. The new plan is subject to regulatory and court approval. Post-merger, the holding company will cease to exist and ESFB will have 100 per cent public stake.
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Brokerage houses taking the merger positive
Brokerage house MK Global is considering this merger as positive for the long term. The brokerage firm says that after the completion of the merger, the bank will be able to apply for a universal bank license. Bank can increase business and shares will rise. The brokerage house has given a buy rating on Equitas Small Finance Bank with a target price of Rs 80 per share. Presently the share price of Equitas Small Finance Bank is Rs 54.05. That is, this stock can give a return of about 48.15%.