HDFC Bank shares gain nearly 2% on proposal to divest entire stake in HDFC Education and Development Services

Shares of the country’s leading private sector lender HDFC Bank in Monday’s trade (April 1, 2024) rose nearly 2 per cent to day’s high price of Rs 1473.25 boosting headline indices to record highs on the first trading session of FY25. At the close, the heavyweight stock settled at Rs 1470, up 1.5 per cent apiece on the BSE.

The gains in the stock were spurred after the bank informed about the execution of a binding term sheet for the sale of 100 per cent equity held by the lender in HDFC Education and Development Services Private Limited.

Last year, the banking regulator RBI allowed HDFC Bank to continue to hold the stake of erstwhile HDFC in HDFC Education and Development Services for a period of two years from the date of merger of HDFC’s wholly owned subsidiaries with itself and HDFC Bank’s merger with HDFC. 

“In furtherance of the aforesaid RBI direction and after due deliberation and in the interests of maintaining transparency in the proposed divestment, HDFC Bank has decided to undertake the sale of its 100% stake in HDFC Edu. (the “Proposed Transaction”) using the Swiss challenge method,” the lender said in an exchange filing.

Further, the filing by the lender said that it has on March 30, 2024, entered into a binding term sheet with an interested party and the offer contained in such term sheet shall serve as the anchor / base bid to seek counter offers from other parties interested in participating in the aforesaid Swiss challenge process.

HDFC Bank shall finalise the purchaser on the basis of the completion of the Swiss challenge process, subsequent to which such purchaser and HDFC Bank will enter into definitive documentation for the proposed transaction. 

At the time of writing the copy at around 12:51 pm, shares of the heavyweight stock traded with gains of over 1 per cent at Rs 1465.75 per share on the BSE.

HDFC Bank share performance

In the last FY ending March 31, 2024, shares of HDFC Bank emerged as the worst performer within the Nifty 50 basket, delivering a negative return of 11 per cent.

Analysts' take on HDFC Bank stock

Earlier in March global brokerage firm Jefferies suggested a 'buy' view on the counter with a target price of Rs 1800, implying an upside of over 24 per cent from the previous close. The brokerage's view came following senior management's exit at the lender and it said that a smooth transition would be key. Meanwhile, another brokerage Nomura maintained its 'neutral' view with a target of Rs 1625.

The consensus recommendation on the counter from 39 analysts is a 'buy', shows Trendlyne data.