Shares of CSB Bank rose as much as 7.1% in trade to Rs 355.85 after the government called off the proposed disinvestment of IDBI Bank. The halt to the sale has removed expectations of a possible merger between IDBI Bank and CSB Bank that investors had earlier factored into valuations.
CSB Bank's rally followed reports that bids submitted for the IDBI Bank stake sale fell below the reserve price, prompting the government to discontinue the process.
The Centre has called off the disinvestment of IDBI Bank after the bids received did not meet expectations, government sources told NDTV Profit on Friday. The two bids—from Fairfax and Emirates—came in below the reserve price, the sources said. IDBI Bank shares fell as much as 15.3% to Rs 78.05 after the development.
Merger Expectations
Fairfax already owns a 40% stake in CSB Bank. If the IDBI Bank transaction had gone through, Fairfax could have had control over both banks. The Reserve Bank of India usually permits only one promoter per bank. Market participants had therefore expected that a successful acquisition of IDBI Bank could lead to a merger between IDBI Bank and CSB Bank.
The decision to halt the sale removes that possibility for now, which traders say may have supported CSB Bank shares in early trade.
Disinvestment Plan
Under the proposed transaction, the government planned to divest a 30.48% stake in IDBI Bank, valued at about Rs 36,000 crore at current market prices. Life Insurance Corporation of India was also planning to sell a 30.24% stake. The combined stake on offer would have been 60.72%, with an estimated value of about Rs 72,000 crore.
The disinvestment process began on Jan. 7, 2023, when the Department of Investment and Public Asset Management received multiple expressions of interest from potential bidders.
NDTV Profit had earlier reported delays in the sale due to the impact of the Iran conflict on the disinvestment pipeline. People familiar with the matter had said the government would proceed with caution on the strategic sale of IDBI Bank.
Key Factors For CSB Bank
CSB Bank reported weak numbers in the December quarter. However, higher gold prices may support the lender's loan book in the March quarter, as gold loans form a large part of its portfolio.
The stock is still down about 37% from its 2026 highs. Eight out of nine analysts tracking the company have a buy rating on the stock, according to Bloomberg data. The average 12-month target price stands at Rs 479 per share, implying a potential upside of about 37% from current levels.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.