Equitas SFB climbs 6% as it moves forward with reverse merger process

Shares of Equitas Small Finance Bank rose 6 percent on Wednesday, November 30, after the company disclosed that it has a meeting scheduled with the National Company Law Tribunal on December 21, 2022, in accordance with the process of reverse merger with its parent company.

During Wednesday’s trade, the stock opened at a price of Rs. 53.95 per share against the previous close of Rs. 53.65 per share and grew further during the early trading session to touch an intraday high of Rs. 56.95. 

It was trading at ₹55.90, up by 4.19 percent, at 11:20 a.m. on the NSE.

The stock touched a 52-week high of Rs. 63.80 on December 13, 2021 and a 52-week low of Rs. 37.45 on June 17, 2022, indicating that at the current level, the stock is trading over 49 percent above its 52-week low and 18 percent below its 52-week high.

The stock has grown over 37 percent in the last six months. However, in the past one year, it has declined by nearly 7 percent. The stock has given returns of almost 70 percent in the last five years to its shareholders.

The bank has already got two approvals: (a) a "no-objection" from the RBI in May 2022 and (b) a shareholder approval in September 2022. 

The bank had disclosed a revised share swap ratio of 100:231 for the reverse merger. The management has stated that it expects the amalgamation process to be completed around January 2023.

According to a research report by Kotak Institutional Equities Research, Equitas SFB is well-positioned for improved return ratios and growth. “The bank is now navigating through the final few steps of the reverse-merger process, which provides an opportunity for Equitas Holdings’ shareholders to benefit from the holding company’s discount narrowing,” it said.

Last week, The Indian Express reported that DSP Investment Managers Private Ltd (DSPIM) has acquired a 10 percent stake in Equitas Small Finance Bank for an undisclosed amount following approval from the Reserve Bank of India.

Equitas Small Finance Bank Ltd., founded in 1993, has a market capitalisation of ₹6,723.57 crore. Its products and services include micro-loan against property, commercial vehicle finance lending, microfinance lending, demand deposits, time deposits, and fee-based products through its distribution of insurance and mutual fund products.