The value of IDFC’s holding in the bank (36.52%) is Rs. 12725 Cr and the sale value of AMC business is Rs. 4500 Cr. As against this, the mkt cap of IDFC is only Rs 12175 Cr, an implied discount of some 41%. While the IDFC shareholders may not be able to get the entire upside of 41% as when the reverse merger happens, it is a reasonable expectation that one can get at least half of it ie 20%. It is my belief that the bank will do very well in the run up to the merger and its performance will get reflected in the IDFC market cap. Only when the implied discount goes below 20% or so, I will think of switching it back to the bank.
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