For 1100 qty Rs 10800 credited. Can someone explain the calculation? It is Rs 11 per share, right?
There is a 10% TDS debited & paid to government.
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Did anyone explored the taxation on reverse merger? is it considered a sale of IDFC Ltd. shares and fresh buy IDFC Bank? interested to know how it might be treated from tax point of view.
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I dont have good understanding of taxes hence went through chatGPT to simplify it for me and used Ujjivan as a scenario.
In India, the tax implications of a reverse merger would depend on whether the transaction qualifies as a tax-neutral merger under the provisions of the Income Tax Act, 1961. If the merger qualifies as a tax-neutral merger, there would be no capital gains tax implications for the shareholders.
However, if the merger does not qualify as a tax-neutral merger, then the shareholders may be liable to pay capital gains tax on the difference between the cost of acquisition of the shares and the fair market value of the consideration received in the merger. The capital gains tax rate would depend on whether the shares held were long-term or short-term assets. If the shares were held for more than 12 months, they would be classified as long-term assets and the applicable tax rate would be 20% plus applicable surcharge and cess. If the shares were held for less than 12 months, they would be classified as short-term assets and the applicable tax rate would be 30% plus applicable surcharge and cess.
Yes, the merger of Ujjivan Small Finance Bank into its parent company Ujjivan Financial Services was structured as a tax-neutral amalgamation under Section 2(1B) of the Income Tax Act, 1961.
Accordingly, the transaction was exempt from capital gains tax for the shareholders of Ujjivan Small Finance Bank who received shares of Ujjivan Financial Services as consideration for the merger.
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It should be 10 and 15.
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They have not yet announced the conversion ratio right? (between IDFC and IDFC first)
Correct. however if you look at the price delta between bank and IDFC Ltd, Market is prescribing the ratio to be between 1.34~1.56 (for the data range Feb-May)
idfc ltd has a total investments in associates at 11,221 cr. IDFC first bank has a net worth of around 24,000. 40% of this is around 9300 cr. Hence this 9300 should be the investment in associates on IDFC ltd balance sheet from its investment in IDFC first bank. Rest 1900 cr is from its other investments. IDFC first bank has a market cap of 42,237 cr. 40% of this yields a value of 16900cr. Hence actual value of idfc ltd should be 1900 cr + 16900 cr= 18800 cr. This is more than 30% premium to current market cap. Hence I believe IDFC ltd is undervalued. Please correct me if wrong.
Disc- Invested in IDFC ltd.
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I’m not sure that this is correct. Where did you get the 11221 Cr number from? This would reflect investments at cost (which is likely on the average to be at a premium to book value of IDFC First). Substantially all the investment now would be IDFC First.
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IDFC Ltd. Mar 2023 results shows only 9376.73Cr as investments which to my knowledge should be all in IDFC First Bank 40% share.
| Investment | Market Cap | 40% Value | DIFF | % | |
|---|---|---|---|---|---|
| IDFC Bank | 49,558 | ||||
| IDFC Ltd. | 9,376 | 16,768 | 19823.2 | 3,055 | 18% |
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Noticed that in last 6-8 weeks the prescribed share swap ratio by Market (Derived from Share prices) seems to be going down towards 1.3x.
Also noticed that increase % is higher in Bank and decrease is relatively higher in IDFC Limited.
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Congratulations to all IDFC shareholders who did not believe that dividend ( 11 rupees ) time was the top and stick to their long term play.
Market has rewarded wonderfully to everyone as idfc shot up about 40% even after dividend…
As per my limited experience, one should not make extra deep micro analysis, if you have long term play in mind. Market is more smarter than participants. I have learned this lesson hard way.
Disc: Holding and did not sell during dividend period.
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Can someone guide the steps to complete merger process
Also likely time span in which the merger shall get completed
Timeline wise Mr Vaidyanathan mentioned in a recent interview it’ll take about 9-12 months to complete. I think they need to get both companies’ shareholder approvals for the merger ratio. Also it was mentioned it is subject to regulatory approvals, possibly from SEBI, RBI and NCLT.
Still buying IDFC ltd is okay ? I mean any risk of cancel this re merger ?
I dont see any risk on buying IDFC.
Note: I have sold IDFC First bank and bought IDFC
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Any updates on when the merger is expected to complete?
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