Shares of IDBI Bank Ltd. soared by 19.14% in Wednesday's trading, hitting a high of Rs 91.90 on the BSE. This significant rally, which pushes the stock's one-month gain to 31%, comes amidst growing market speculation regarding the government's potential divestment of its stake in the lender.
Divestment Hopes Fuel Rally
While IDBI Bank itself issued no fresh reports or exchange filings, media outlets recently cited government sources indicating that a divestment of IDBI Bank could be on the cards for the upcoming financial year (FY27). This prospect has buoyed investor sentiment, aligning with the government's ambitious disinvestment target of Rs 80,000 crore for the current fiscal year.
The government has recently undertaken several Offer for Sales (OFSes) in state-run companies, raising over Rs 13,389 crore through four recent transactions. These include stake sales in NLC India, NHPC, Coal India, and Central Bank of India. The flurry of activity has heightened expectations that IDBI Bank, where the government holds a substantial 94.71% stake (including LIC's 49.24%) as of the March quarter, could be next.
Financial Performance Overview
In its March quarter results, IDBI Bank reported a profit after tax of Rs 1,943 crore, a 5% year-over-year decrease but a 0.41% sequential increase. Profit before tax stood at Rs 2,758 crore, down 7% year-over-year.
Conversely, the bank's Net Interest Income (NII) saw a robust 17% year-over-year increase, reaching Rs 3,851 crore. The Net Interest Margin (NIM) for the quarter improved to 4.15%, up 15 basis points year-over-year. The bank also reported a Return on Asset (RoA) of 1.75% and a Return on Equity (RoE) of 14.35%.