Govt holds ₹1.4 lakh crore disinvestment potential; IDBI Bank sale could alone meet FY27 target of ₹80,000 crore: Report

The government’s disinvestment programme has gathered pace in FY27, with the potential strategic sale of IDBI Bank alone likely to help it meet its annual disinvestment target for the fiscal, according to JM Financial.

The brokerage, in a report on disinvestment, estimates that the government’s equity holding is more than 75% in 17 listed companies, creating a potential disinvestment opportunity of around ₹1.4 lakh crore. However, it cautioned that the inclusion of these companies does not necessarily mean they will be targeted for immediate stake sales.

“Although it is not certain whether the next disinvestment would be carried out in these companies, this list will be the primary target for monetisation,” JM Financial said in its report.

LIC accounts for the largest share of the estimated potential, at around ₹80,090 crore, or 57% of the total. However, the government is unlikely to reduce its stake in the insurer in the near term after selling 6.5% last month, the brokerage said.

Four banks - Indian Overseas Bank, UCO Bank, Punjab & Sind Bank and Central Bank of India - are among the 17 companies, together representing potential disinvestment proceeds of around ₹21,200 crore.

Among others, Indian Railway Finance Corporation, Mazagon Dock Shipbuilders, FACT, KIOCL, ITI, New India Assurance and General Insurance Corporation together account for a potential disinvestment value of around ₹3,380 crore.

JM Financial expects the government to follow a similar approach to LIC and sell minority, non-controlling stakes in these lenders through open-market routes rather than pursue large strategic sales.

IDBI Bank sale could surpass FY27 disinvestment target

The proposed strategic disinvestment of IDBI Bank remains a key opportunity for the government. The transaction, which has been pending since 2021, could generate around ₹28,900 crore if the proposed stake sale goes through, the report noted.

The government currently owns 45.48% of IDBI Bank, while LIC holds 49.24%. Under the proposed transaction, the government could sell 30.48% and LIC 30.24%.

According to JM Financial, proceeds from the proposed transaction would amount to around 36% of the government’s ₹80,000 crore FY27 disinvestment target. “It is highly likely that the government’s FY27 disinvestment target will be met with a single transaction if the strategic sale of IDBI Bank ... goes through in this fiscal,” the brokerage said.

The government has already raised ₹118 crore through the strategic disinvestment of Indian Medicine Pharmaceutical Corporation Limited (IMPCL) in FY27.

Achieves 70% of disinvestment target in first five months of FY27

Disinvestment activity has accelerated after the government missed its budgeted target for seven consecutive years from FY20 to FY26. During the first five months of FY27, between April and August 2026, disinvestment receipts stood at ₹55,700 crore, equivalent to 70% of the annual target, compared with an average of 33% during FY20-FY26.

The proceeds included ₹31,500 crore from the 6.5% OFS in Life Insurance Corporation of India, ₹5,500 crore from a 2% stake sale in Coal India, ₹4,400 crore from NHPC, ₹3,040 crore from Hindustan Copper, and ₹3,100 crore from General Insurance Corporation of India. Other transactions included stake sales in Central Bank of India, NLC India, Indian Railway Finance Corporation, Cochin Shipyard and Indian Medicines Pharmaceuticals Corporation, along with remittances from SUUTI.