Equitas SFB, Equitas Holdings rally on back of amalgamation scheme approval

The shares of Equitas Small Finance Bank and Equitas Holdings were rallying on Tuesday after the board of directors and shareholders approved an amalgamation scheme for the companies on Monday. Equitas Small Finance Bank (SFB) has announced a swap ratio - for every 100 shares that you have in Equitas Holdings, you will get about 226 shares of Equitas SFB.

Currently, the SFBs capital base is about Rs 114 crore and as of July 26; the market cap was a little north of Rs 7200 crore and promoter holding in that equity base is of about 93.4 crore shares.

So, as per the swap ratio, Equitas Holdings will get 77.24 crore shares from Equitas SFB and Equitas Holdings will reduce its promoter holding by about 3 percent, from 81.75 to about 78.74 percent.

The reduction in number of outstanding shares is being done, assuming same market cap will up the price of the SFB’s shares. Therefore, the impact of reduction can boost SFB price to about Rs 73.75 versus Monday’s closing of Rs 63.15, which is an upside of 16-16.5 percent.

For Equitas Holdings, with the promoter holding coming down to 78.74 percent, the stake works out to about Rs 166 per share. So, the current holding of Equitas Holdings is Rs 4,254 crore, which post the scheme of amalgamation can move to about Rs 5681 crore, which is an upside of 33.5 percent. As of Monday, Equitas Holdings was being quoted at a significant discount of 28.1 percent.