Aditya Birla Capital: A day after the board of directors of Aditya Birla Capital Limited authorized the merger of Aditya Birla Finance Ltd with itself on March 11, shares of Aditya Birla Capital rose about 4 percent at the opening on the NSE on March 12. The merger was announced post-market hours.
At 9:20 am, the stock was trading at Rs 186.90
In a regulatory statement, Aditya Birla Capital stated that the board had considered and approved” the merger of Aditya
A fully owned subsidiary of the company is Aditya Birla Finance Limited. The Scheme inter alia provides for the amalgamation of the Amalgamating Company with the Company, and dissolution of the Amalgamating Company without winding up, the filing stated.
Aditya Birla Capital will transform a holding company into an operational non-banking financing company (NBFC) following the merging, according to the business. This would result in the creation of a single, sizable entity with increased financial strength and flexibility, allowing for direct access to capital.
Aditya Birla Finance now has total assets of Rs 1,400 crore, whilst Aditya Birla Capital Limited has total assets of Rs 13,000 crore as of December 2023. Vishakha Mulye will take over as MD and CEO, while Rakesh Singh will become Executive Director and CEO (NBFC) of the merged company.
Morgan Stanley has issued an equal-weight call on the company, with a target price of Rs 196 per share. According to the brokerage, a tangible economic advantage is not significant and may reduce the holding company discount that would result if the NBFC is listed by September 25. This merger will require RBI permission, according to the article.
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Jefferies has upgraded the stock to a buy rating and boosted the target price to Rs 225 per share. According to the brokerage, if approved, the strategy will streamline the corporate structure and increase the CRAR by 150 basis points.
