IDBI Bank shares rallied 19% today; here's why

Shares of IDBI Bank Ltd climbed 19 per cent in Wednesday's trade amid high volumes. While there was no fresh report or exchange filing by the lender, a recent flurry of offer for sales (OFSes) by the government in various listed state-run companies lifted hopes the government may go for IDBI Bank divestment in FY27, as reported by various media outlets recently, citing government sources. 

The government has set an ambitious disinvestment and asset monetisation target of Rs 80,000 crore for the ongoing financial year. This is against the actual divestment receipts of Rs 16,885.56 crore and asset monetisation of Rs 28,420.49 crore in FY26, as per DIPAM. 

The government's sharp focus on meeting its FY27 target is visible following five back-to-back OFSes including the ongoing General Insurance Corporation of India issue. A total of Rs 13,389.42 crore has been raised via four OFSes recently. They included a 2.73 per cent stake sale in NLC India for Rs 1,223.57 crore, 6.01 per cent stake sale in NHPC for Rs 4,357.36 crore, 2 per cent stake sale in Coal India for Rs 5,542.36 crore and 8.08 per cent stake sale in Central Bank of India for Rs 2,266.13 crore. Post the recent divestments, government held 61-81 per cent stake in the PSUs. 

In the case of IDBI Bank, the government owned 94.71 per cent stake at the end of March quarter. This included LIC's 49.24 per cent stake in the lender.

On Wednesday, the stock rose 19.14 per cent to hit a high of Rs 91.90 on BSE. With this, the stock is up 31 per cent in the past one month. A total of 70.86 lakh IDBI Bank shares changed hands till 1 pm on BSE compared with a two-week average of 7.63 lakh shares. On NSE

PTI had in April reported that the government may ask for revised financial bids from two potential buyers of IDBI Bank as their original bid amounts were lower than the reserve price fixed for the strategic sale of the lender. A report by Moneycontrol last week suggested the strategic divestment of IDBI Bank will be completed in FY27, with the sale process continuing despite delays.

IDBI Bank reported a profit after tax of Rs 1,943 crore for the March quarter, down 5 per cent YoY and up 0.41 per cent sequentially. 

Its profit before tax came in at Rs 2,758 crore, down 7 per cent YoY. Net interest income (NII) stood at Rs 3,851 crore, up 17 per cent YoY and 20 per cent sequentially. Net interest margin (NIM) for the quarter at 4.15 per cent was up  15 basis points (bps) YoY and 63 bps QoQ. Its Retrun on asset (RoA) stood at 1.75 per cent and return on equity (RoE) at 14.35 per cent.