idfc bank rally merger idfc parent company new bank results sensex share price rally gain gains jump climb
Prime Minister Narendra Modi witnessing the account opening of the first beneficiary in IDFC Bank, at the launch of the IDFC Bank, in New Delhi on October 19, 2015. Finance Minister Arun Jaitley and the then Minister of State for Finance, Jayant Sinha are also seen.PIB India

Shares of private sector lender IDFC Bank continued their rally on Wednesday on the markets, gaining 5.73 percent to close at Rs. 81.20. In the past three months, the share price of the bank has outperformed the BSE Sensex and almost doubled, from Rs. 44.75 on June 28, 2016.

The rally is attributed to a possible merger of the entity with parent company IDFC Limited.

The bank launched its operations from Oct. 19, 2015 after receiving licence from the Reserve Bank of India two years ago. 

The possibility of the bank merging with parent IDFC was hinted at by Rajiv Lall, founder, managing director and chief executive officer of IDFC Bank, last month.

The Mint quoted him as saying that the bank was in talks with the regulator on the issue, though the board was yet to consider such a merger.

The bank's profile, especially the quality of its assets, were perceived by an analyst as an indicator of bullish times ahead.

"The bank's better growth prospect, improving asset quality, better operational metrics, improving RoA (return on assets) and higher profit growth is going to re-rate the stock price and its valuation will multiply in years to come," the analyst with a domestic brokerage, requesting anonymity, told the Mint.

As of June 30, 2016, the bank's advances stood at Rs. 50,410 crore, while gross non-performing assets (NPAs) and net NPAs declined marginally to 6.09 percent and 2.32 percent, respectively.

Net profit rose 60 percent to Rs. 265 crore while operating income increased 28 percent to Rs. 712 crore.

The bank will be holding its board meeting on Oct. 25 to consider the second quarter results, it said in a regulatory filing on Wednesday.