IDBI Bank share rises 9% on report of stake sale by govt

Shares of IDBI Bank Ltd. rose over 9% on Thursday to a four-month high of ₹43.85 on the Bombay Stock Exchange (BSE) amid reports of a possible stake sale by the government, which will pave the way for its privatisation.

At 12.01 PM today, the IDBI stock was trading 9.48% higher at ₹43.80 as compared to the previous session close of ₹40.10 and the opening price of ₹40.65 on the NSE. The stock outperformed the sector by 7.43% today while touching an intra-day high of ₹44.2 after rising 10.09% in one day.

The central government holds around 45.48% stake in IDBI Bank, while 49.24% is held by state-owned insurance giant Life Insurance Corp. of India (LIC), together accounting for about 94% stake in the bank.

Both the parties are reportedly planning to sell some part of their stakes in the bank soon, a global business news agency report said citing people familiar with the matter. However, both the government and IDBI Bank are yet to come out with any statement in this regard.

LIC is currently the promoter of IDBI Bank with management control and the government is the co-promoter. The extent of respective shareholding to be divested by the Centre and LIC could be decided at the time of structuring of the transaction in consultation with the Reserve Bank.

The IDBI Bank stock has been gaining for the last two days and has risen 12.56% returns in the period. The shares of IDBI Bank have risen 7.19% in the past five days and 15.34% in the past year, taking its market cap to ₹46,934 crore.

The stock, which is in the bullish range, is trading higher than the 5-day, 20-day, 50-day, 100-day and 200-day moving averages.

The Prime Minister Narendra Modi-led cabinet had approved the infusion of ₹4,557 crore by the government in financially-troubled IDBI Bank in September 2019. The move was aimed at helping in completing the process of IDBI Bank’s turnaround and enabling it to return to profitability and normal lending. LIC had bought a 51% stake in the bank for ₹21,624 crore at an average price of ₹61 apiece.

Following this, the government gave in-principle approval for strategic disinvestment along with the transfer of management control in IDBI Bank Ltd in May 2021.

IDBI's April-June quarter net profit stood at ₹756 crore, QoQ growth of 10% and YoY growth of 25%. The net interest income (NII) also grew to ₹2,488 crore, with QoQ growth of 3% and a 1% decline on a YoY basis. The bank's net non-performing assets (NPA) as of the June quarter of FY23 were at 1.25% for against 1.36% for Q4 of FY22. The gross NPA ratio improved to 19.90% as of June 30, 2022, against 22.71% as of June 30, 2021.

Gross NPA stood at 20.16% as of March 31, 2022. The net advances grew by 12% YoY to ₹1,38,046 crore as of June 30, 2022, while gross advances stood at ₹1,70,390 crore as of June 30, 2022, YoY growth of 9%.