IDBI Bank shares fall 7% as investors book profit after Fairfax deal gets cabinet nod
IDBI Bank shares plunged as investors booked profits after a nearly 13% rally in the previous session following the Cabinet’s approval of Fairfax’s acquisition of a 60.72% stake in the lender. The stock had hit Rs 93.60 on Wednesday, lifting its market capitalisation above Rs 1 lakh crore. The Rs 52,878 crore deal marks a major step in IDBI Bank’s long-awaited privatisation, with Fairfax’s bid of…
IDBI Bank's shares dropped 7% to Rs 83.87 on Thursday, following the Union Cabinet's approval of Fairfax's acquisition of a 60.72% stake in the lender. The decline was attributed to investors booking profits after the stock's strong rally on Wednesday, reaching Rs 93.60, its highest level in nearly two weeks. The market capitalization of IDBI Bank surpassed Rs 1 lakh crore due to the rally, which was triggered by the Cabinet's approval for the sale of the government's and LIC's combined stake to Fairfax Financial Holdings for Rs 52,878.08 crore.
This deal marks a significant milestone in IDBI Bank's transformation journey after years of financial distress. Fairfax's bid of Rs 81 per share was higher than the Rs 75.99 average fair valuation suggested by two independent professionals. The government will retain a 15% stake, while LIC will hold 19% following the transaction.
The successful bidder must also clear the RBI's 'fit & proper' assessment and other regulatory approvals before the deal is finalized. The transaction is anticipated to be the largest foreign direct investment in India's financial sector and positions IDBI Bank at the heart of the government's initiative to bring private and foreign capital into the banking sector.
In recent times, IDBI Bank has demonstrated substantial progress, with its gross NPA ratio dropping from 31.78% in September 2018 to 2.32% in March 2026, and net NPAs decreasing from 17.30% to 0.15%. Its net profit reached Rs 9,513 crore in FY26, and total business grew by 18% year-on-year to Rs 6.27 lakh crore as of September 30.
IDBI Bank's latest quarterly update revealed a 17% rise in deposits to Rs 3.56 lakh crore and net advances expanding by 18% to Rs 2.72 lakh crore. As the privatisation process advances, the subsequent phase will involve Fairfax making the repaired lender more competitive in the private banking domain. For now, the substantial decline appears to be investors liquidating their holdings following Wednesday's 13% surge.
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