Shares of Capital First jumped as much as 7.1 per cent to Rs 901.85, its highest since February 2008. IDFC Bank Ltd rose as much as 2.2 per cent to Rs 69.

At about 10.40 am, Capital First shares were up 5.28 per cent or Rs 44.25 at Rs 881.75 on the NSE. However, IDFC Bank erased its gains to decline 0.81 per cent to Rs 66.95.

IDFC Bank will buy Capital First in a share swap deal valued at about $1.5 billion to boost its retail lending activities Proposed merger favours Capital First on valuations, but deal brings in more strategic positives for IDFC Bank vs Capital First, Jefferies said in a note.

For Capital First, the most visible synergy lies in lower cost of funds and access to growth capital as a bank, Jefferies added,

CLSA said the merger was positive for IDFC Bank as it offered a chance to scale-up its retail lending franchise, with Capital First transitioning into a bank.

Capital First stock has risen 34.4 per cent in 12 months up to Friday, while IDFC Bank shares has gained 7.1 per cent.

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