PSU Bank Under Rs 100: What’s Driving This Stock’s 6 per cent Surge Today?
IDBI Bank’s Divestment Gains Momentum as Due Diligence Wraps Up
Shares of IDBI Bank Ltd, a public sector bank trading under Rs 100, witnessed a sharp 5.72 per cent rise in intraday trade, reaching Rs 71.89 per share. The surge came on the back of reports indicating the completion of the due diligence process by bidders, marking a crucial step in the government’s ongoing divestment process.
The strategic divestment of IDBI Bank has been progressing steadily, with the Department of Investment and Public Asset Management (DIPAM) pushing to finalize the process within the next few months. Sources suggest that with the due diligence phase completed, the financial bidding round is expected to take place within the next one to two months. The government aims to conclude the entire stake sale process in the next three to four months.
As per the shareholding pattern of IDBI Bank, the Government of India holds a significant 94.72 per cent stake, with LIC owning 49.24 per cent and the remaining 45.48 per cent held directly under the name of the President of India. The proposed divestment plan includes selling approximately 60 per cent of the government’s stake, which is expected to bring in significant interest from potential investors.
The Finance Ministry has reiterated that the divestment process remains on track. Arunish Chawla, Secretary of DIPAM, recently stated that while specific details are yet to be disclosed, the government is optimistic about meeting its timeline. Additionally, last month then Finance Secretary Tuhin Kanta Pandey expressed confidence that the financial bids would be submitted by March 2025.
IDBI Bank has shown a strong financial performance in recent quarters, which has further supported investor confidence. In Q3 FY25, the bank reported a robust 31 per cent Year-on-Year (YoY) growth in net profit, reaching Rs 1,908.27 crore, compared to Rs 1,458.18 crore in the same period last year. The growth was driven by a rise in net interest income (NII) and a reduction in provisions.
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The bank’s NII increased by 23 per cent YoY to Rs 4,228 crore from Rs 3,435 crore in Q3 FY24. However, other income saw a decline of nearly 23 per cent YoY to Rs 749.35 crore. Despite this, the bank’s total income grew by approximately 14 per cent, reaching Rs 8,564.92 crore.
A key metric of profitability, the Net Interest Margin (NIM), also saw improvement, rising by 45 basis points (bps) to 5.17 per cent during the quarter, compared to 4.72 per cent in the previous year.
At its current market price of Rs 70.4 per share, IDBI Bank has a market capitalization of Rs 75,700 crore. The stock has been in focus as investors closely track developments around the government’s divestment plan, which is expected to drive further movement in the stock price.
Disclaimer: This article is for informational purposes only and should not be construed as investment advice.