Shriram Group & IDFC Group have entered into an agreement to explore merger of their financial services business. Under the stated plan, STFC will become fully owned subsidiary of IDFC and thus will get de-listed from the stock exchange. However, in our view the merger proposal will face multiple headwinds such as: (a) getting regulatory nod due to complex interholding; and (b) the minority shareholders of STFC may not favour the move unless they are offered a very high premium over the CMP. Further, we expect STFC's operating environment would improve after implementation of BS-IV emission norms for vehicles and GST roll-out. The government's efforts to revive growth in infrastructure space and rural economy augur well for...