ValuePickr Forum

GRUH Finance - mini HDFC

Remember that they were trying to hold on to their post conversion stake of about 15%, which was not allowed by RBI. So, they seem to be interested in Bandhan. HDFC may hold on to their stake for at least few years.

I am planning to buy Bandhan Bank share but I found GRUH is available at some discount to it. So my question is should I buy GRUH in place of Bandhan to gain this arbitrage or I am missing something here ?

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by selling this 6.1% stake today, is the shareholding restriction mandate complete now or there is still some % stake that HDFC has to sell?

14.96% less 9.9% is 5.06%. This is post merger stake.
So, 5.06% / 0.568 is pre merger stake to be sold is 8.9%.
Therefore, this is the last leg of stake sale.

6.43% Pre-merger stake was sold on 24th May (as per BSE filling) & 4.2% (as per CNBC tweet) is sold today. The total pre-merger sale is 6.43+4.2=10.63%

In last one month, HDFC has sold 10.63% of GRUH or about 7.6 cr shares.
HDFC Ltd is yet to sell around 6.7cr shares of ~9% of holding in GRUH

Selling hangover remains in GRUH as the offer letter mentions that there is no lock-in for HDFC

HDFC’s shareholding on 24 May 2019

51.65% of 733687512 (Rs 1467375024/2)
or 378968926 shares

today they have sold 3,10,00,000 or 4.22% shares more.

Net holding = 378968926-3,10,00,000 = 347968926
Update https://www.bseindia.com/xml-data/corpfiling/AttachLive/6680F899_C6ED_42AF_8E6E_5EE4196F34C4_154817.pdf

Post Merger Holding = 347968926*.568 = 197,646,349

Bandhan Bank total number of shares = 1193082855
https://www.bseindia.com/corporates/shpSecurities.aspx?scripcd=541153&qtrid=101.00&Flag=New

Total Shares post merger = 733687512 * 0.568 + 1193082855
= 1609817361

HDFC Shareholding = 197,646,349/1609817361 = 12.2776%

So there will be more selling (about 6,73,84,562 shares) as they need to bring down their holding to 9.9% or below…

Disc: Invested

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HDFC is selling GRUH in open market to keep its holding below 9.9% in Bandhan (post amalgamation). If we observe the impact on price movement, it indiactes that GRUH is getting capped by this activity.

On 24th May HDFC sold 4.59 Cr (6.43%) - impacting Gruh prices by approx 7% (although it recovered a little bit by EOD)
On 14th June HDFC sold 3.1 Cr (4.2%) - impacting Gruh prices by approx 7% (again it could recover a little bit by EOD)
They still need to sell 6.7 Cr (again we will have shocking day / days)

Now my queries

  1. Is there a legal binding that HDFC can’t sell in one shot (Rather than having pain each month, we get rid of recurring pain)
  2. Insider players enjoy this as we see huge activity in last 15 minutes (just prior to sale day)
  3. There is no notice to share holders about such sale (they do inform NSE/BSE after the sale)
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Management says the new directive by NHB would slow down loan disbursement and will hit sales of developers more as funding would be more difficult for them. Now disbursement would be as per construction to avoid home buyers getting stuck due to non-complete projects.

Disc - Invested.