Winning Bizness Desk
Mumbai. Mumbai witnessed a sharp sell-off in IDBI Bank shares on Monday as the stock plunged nearly 15 percent at market opening after the government decided to cancel the strategic disinvestment process. The move followed financial bids coming in below the reserve price, effectively halting the long-pending privatisation plan and rattling investor sentiment.
Bids fall short of government reserve price expectations
Under disinvestment rules, the government cannot accept bids below the pre-set reserve price, making it mandatory to scrap the process in such cases. Officials indicated that the bids submitted did not match valuation expectations, especially considering the bank’s price-to-book metrics. The reserve price was considered significantly high, making it difficult for bidders to match.
Key takeaways:
- Disinvestment likely delayed until valuation alignment
- Investor confidence may remain fragile in near term
- Government may revisit pricing and strategy
- Fresh bidding process could take time to initiate
Key bidders include global and domestic institutions
Shortlisted bidders for the stake sale included Fairfax Financial Holdings and Emirates NBD, both of which submitted their financial bids on February 6. Kotak Mahindra Bank was also among the shortlisted entities but had earlier signalled its decision to opt out of the financial bidding stage. The lack of aggressive participation further weakened the disinvestment prospects.
Planned stake sale structure and government holdings
The Centre currently holds 45.48 percent stake in IDBI Bank, while Life Insurance Corporation of India holds 49.24 percent. The proposed disinvestment plan involved a combined sale of 60.7 percent stake.
Key components of the planned deal included:
- 30.48 percent stake from the Government of India
- 30.24 percent stake from LIC
- Post-sale holding projected at 15 percent for government
- LIC expected to retain around 19 percent
The government’s stake sale alone was estimated at around Rs 30,000 crore based on prevailing market prices.
Stock performance reflects sustained investor concerns
The cancellation of the disinvestment process has intensified pressure on the stock, which has already been underperforming across multiple time frames. Market participants reacted swiftly, leading to heavy selling.
Recent stock movement highlights:
- 13.61 percent fall to Rs 79.63 in current session
- 20.43 percent decline over the last five days
- 28.85 percent drop in one month
- 14.51 percent fall over six months
The continued decline reflects broader concerns over valuation, policy clarity, and investor appetite for public sector bank privatisation.
Year-to-date losses deepen amid policy uncertainty
So far in 2026, IDBI Bank shares have fallen approximately 23.19 percent, underlining persistent weakness. The halt in disinvestment raises fresh questions over the government’s privatisation roadmap and the feasibility of large-scale stake sales in the current market environment.
