IDBI Bank Ltd saw its shares fall over 5% in Thursday's trading session, reaching Rs 85.63 per share on the BSE. This decline follows a substantial 17% surge in the stock price the previous day, which was accompanied by heavy trading volumes.
The bank issued a clarification regarding the recent price movement, stating that there is no undisclosed or price-sensitive information, nor any impending announcement that needs to be communicated to the stock exchange at this time. This statement has somewhat tempered expectations surrounding the government's strategic stake sale in the bank.
Strategic Disinvestment Process Continues
IDBI Bank emphasized that the strategic disinvestment process is being managed by the Department of Investment and Public Asset Management (DIPAM). The bank has consistently made disclosures to stock exchanges about developments related to this process, assuring continued transparency regarding all material events as required by regulations.
Hopes for a strategic sale plan have been building, particularly after a series of back-to-back Offers for Sale (OFSes by the government in other public sector undertakings. The IDBI Bank stock had notably broken above its 200-day moving average on strong volumes prior to the recent fluctuation, recording its highest trading volumes since October 2021.
Previous Bids and Government Stakes
Earlier reports indicated that the government was open to soliciting fresh financial bids for the strategic disinvestment of IDBI Bank, and also seeking revised bids from two entities that had previously expressed interest. Fairfax Financial Holdings Ltd and Emirates NBD were reportedly the two likely bidders for the privatization, but their initial bids were said to be below the reserve price.
IDBI Bank was rescued by Life Insurance Corporation of India (LIC) in 2019 following a surge in bad loans. Its eventual privatization is viewed as a crucial test case for broader banking sector reforms in India. Currently, the government holds a 45.48% stake in the bank, while LIC owns 49.24%. The plan is to jointly divest a majority 60.7% stake.
Government's Disinvestment Targets
The government has set an ambitious disinvestment and asset monetization target of Rs 80,000 crore for the ongoing financial year (FY27). This target is significantly higher than the actual divestment receipts of Rs 16,885.56 crore and asset monetization of Rs 28,420.49 crore achieved in FY26, according to DIPAM data.
The government's strong focus on meeting its FY27 target is evident from recent activity, including five consecutive OFSes. These include the ongoing General Insurance Corporation of India issue, along with recent stake sales in NLC India, NHPC, Coal India, and Central Bank of India, which collectively raised over Rs 13,389 crore. Following these divestments, the government's stake in these PSUs ranges from 61% to 81%.