IDBI Bank surges 16% in 2 days as govt invites bids to appoint asset valuer

Shares of IDBI Bank surged 7 per cent to hit the highest level in more than five years on the BSE in Tuesday’s intra-day trade. The stock hit Rs 69.70, its highest level since April 2018, on the back of heavy volumes. 

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In the past two trading days, the stock has rallied 16 per cent as the government invited bids to appoint an asset valuer for IDBI Bank's divestment. 

Selected bidder will be responsible for evaluating IDBI Bank's assets and provide essential support during the sale process. Bidding window is scheduled to close on October 9, 2023
 
The government along with the Life Insurance Corporation of India (LIC) is selling nearly 61 per cent stake in IDBI Bank and has received multiple Expressions of Interest (EoI) for the same, news agency PTI reported on Monday.

The Department of Investment & Public Asset Management, on behalf of Gol and LIC, on Monday floated an RFP to engage a “reputed Asset Valuer Entity — registered with Insolvency & Bankruptcy Board of India (IBBI), to act as the Asset Valuer for undertaking the IDBI Bank assets' valuation and provide requisite assistance in the process of strategic disinvestment of IDBI Bank, till the completion of the transaction”, it said. 

At 10:27 am; IDBI Bank was quoting 5 per cent higher at Rs 68.35 on the BSE. In comparison, the S&P BSE Sensex was up 0.22 per cent at 65,773. The trading volumes on the counter more-than-doubled. A combined 34.32 million equity shares had changed hands on the NSE and BSE.

In the past six months, the stock has zoomed 40 per cent as against a 9 per cent rise in the benchmark index. The strong outperformance in the stock was due to the continued improvement in its profitability levels, driven by the steady decline in fresh non-performing advances (NPA) additions and the sustained reduction in its legacy stress assets, leading to lower credit costs.

This was supported by the large-scale capital support in the past from the government and LIC, which helped shore up the provision cover on legacy NPAs. This, together with the improvement in profitability, has contributed to the strengthening of the bank’s capitalisation and solvency1 profile over time as well, according to rating agency ICRA.

ICRA said that IDBI's current and savings account (CASA) deposits and retail term deposits grew steadily and the deposit base remains granular. The bank’s ability to continuously maintain and grow the core deposit base upon the change in ownership may, however, remain monitorable.