- Shares of IDBI Bank have fallen about 35% from a recent peak of Rs 118.5 apiece and are 5% down annually
- The stock dropped nearly 30% last month, including a 15-17% decline in the latest session
- Uncertainty around the government’s divestment plan has triggered investor concerns and delays
Shares of IDBI Bank have seen a sharp correction, now down roughly 35% from their recent peak of Rs 118.5 and about 5% lower over the past year. The decline has accelerated in recent weeks, with the stock falling nearly 30% in just the past month, including a steep 15-17% drop in the latest session.
On an intraday basis, the stock is hovering around Rs 76, slipping over 1.5% with weak momentum and heavy volumes, reflecting continued selling pressure.
Divestment Overhang Weighs Heavily
The latest trigger has been uncertainty around the government's long-pending divestment plan. Reports suggest that financial bids received for the strategic stake sale fell short of the reserve price, raising the possibility of delays or even a restart of the process.
This has dented investor sentiment, particularly as the divestment-seen as a key re-rating trigger-has already faced multiple delays over the past few years. The Centre and Life Insurance Corporation of India together plan to sell over 60% stake in the lender, in what could be one of India's largest banking privatisations.
IDBI Bank, however, has maintained that the process is confidential and has not confirmed or denied the reports.
Saurabh Jain, Assistant Vice President – Research (Retail Equities) at SMC Global Securities Ltd. provided some insights on IDBI Bank Ltd. (CMP: Rs 76.31) on yesterday's Ask Profit. He maintained a 'sell' call, and said that investors should wait for a bounce bank. He added that people are hoping that fortune will change after disinvestment, and the stock is not the best of the lot in the category. He advised that investors can reinvest in PSU banks in staggered manner.
Fundamentals Mixed
The sharp correction has compressed valuations, with the stock's price-to-book multiple cooling significantly from recent highs. While this may make the stock appear more attractive on paper, underlying fundamentals remain a key concern.
Margins have come under pressure, with net interest margins declining in recent quarters. Profitability metrics such as return on assets and return on equity have also softened, even as peers have shown resilience.
That said, asset quality has improved, with gross NPAs moderating and loan growth remaining steady at around 14% year-on-year. The bank's loan mix, however, continues to lean toward corporate lending, with limited diversification gains.
ALSO READ: IDBI Bank Sale Called Off On Unviable Bids: Govt Sources
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