HDFC Bank Enters $100 Billion MCap Club, Becomes World's 7th Largest Bank

HDFC Bank Merger: HDFC Ltd, HDFC Bank on Monday joined the exclusive club of companies with a market capitalisation of $100 billion. This makes it the seventh-largest lender globally.

Trading at a market value of about $151 billion or Rs 12.38 lakh crore, it is now the world’s seventh largest lender bigger than the likes of giants like Morgan Stanley and Bank of China.

HDFC Bank is behind JPMorgan ($438 billion), Bank of America (232 bn), China’s ICBC ($224 bn), Agricultural Bank of China ($171 bn), Wells Fargo ($163 bn) and HSBC ($160 bn).

The merger of HDFC Bank and its parent HDFC Ltd was completed on July 1. Today was the first day the bank’s stock started trading as a merged entity.

On July 13, the shares of HDFC Ltd were taken off the bourses as July 12 was the record date for determining eligible shareholders for share allotment.

On Friday, the bank allotted 3,11,03,96,492 new equity shares of face value Re 1 each to eligible shareholders of HDFC Ltd. As a part of the deal, every HDFC shareholder got 42 shares of HDFC Bank for every 25 shares they held in the company.

Accordingly, the paid-up share capital of the bank increased to 753,75,69,464 shares from 559,17,98,806 shares.

In terms of market value on BSE, HDFC Bank remains the third-largest Indian company behind only Reliance Industries (Rs 18.6 trillion) and TCS (Rs 12.9 trillion).

“Within this esteemed group (of $100 bn market cap), it also offers among the best metrics on earnings growth (17-18%) and return on equity (15%), making it relevant for global portfolios. It has the opportunity to leverage large customer base, group linkages to deepen customer-client relationships and drive revenues,” said Jefferies analysts Prakhar Sharma and Vinayak Agarwal.

The foreign brokerage firm has resumed coverage on HDFC Bank with a BUY rating and a target price of Rs 2,100.

“Merger broadens lending & cross-sell avenues especially in mortgages, insurance, MFs. Mobilisation of deposits should drive success & bank is seeing early success with branch expansion. We forecast a profit CAGR of 17% over FY23-26, ROA of 1.9% & ROE of 16% in FY25. Risk is from a spike in rates & lower PSLs,” Jefferies said.