IDBI Bank Shares Surge 19% as Government Revives Privatisation Plans

IDBI Bank's shares rallied sharply on Wednesday, climbing as much as 19% to reach an intraday high of Rs 92.25—its strongest level in nearly three months—before closing 17.12% higher at Rs 90.36. The surge was driven by exceptionally heavy trading activity, with approximately 207 million shares changing hands on the National Stock Exchange by mid-afternoon, more than 28 times the volume from the same time the previous day. Block deals accounted for a significant portion of this activity, with around 82 lakh shares traded across six large transactions at prices ranging between Rs 82 and Rs 92.

The price movement reflects renewed investor optimism around the government's long-stalled privatisation of the state-owned lender. A senior government official confirmed to media outlets that the strategic divestment remains on track and is expected to be completed during the financial year 2026-27 (FY27). The Centre and Life Insurance Corporation of India (LIC)—which jointly own approximately 95% of the bank—are seeking to divest a combined 60.72% stake along with management control, with the government selling 30.48% and LIC disposing of 30.24%.

The divestment process has faced significant headwinds, with previous financial bids from Prem Watsa-led Fairfax Financial Holdings and Emirates NBD falling short of the reserve price threshold. However, government sources indicate that the earlier bids remain "alive" and that officials are examining legal provisions within the tendering framework that could allow offers below the reserve price to be reconsidered. A fresh valuation of the asset is underway and is expected to take approximately one month to complete, after which authorities will make a final determination on pricing and next steps.

Improving financial fundamentals have bolstered investor confidence in the asset. For the quarter ended March 2026, IDBI Bank reported a net profit of Rs 1,943.2 crore, down 5.3% year-on-year, but net interest income showed strength with a 17% increase to Rs 3,851.5 crore. Asset quality metrics also improved, with gross non-performing assets declining to 2.32% from 2.57% in the previous quarter and net NPAs narrowing to 0.15% from 0.18%. The successful bidder will be required to obtain final regulatory approval from the Reserve Bank of India, the Competition Commission of India, and other statutory authorities, and must comply with requirements to make an open offer to minority shareholders.