IDBI Bank shares rally 13%, market value swells by Rs 11,460 crore amid muted market. What lies ahead?

Shares of IDBI Bank rallied nearly 13% on Wednesday, adding more than Rs 11,460 crore to its market capitalisation, bucking the overall muted market sentiment.

IDBI Bank shares jumped to Rs 93.60 apiece on NSE, the highest level seen by the stock in nearly two weeks. The company’s market capitalisation crossed the Rs 1 lakh crore mark as a result of the sharp surge in share price.

The shares have been range-bound recently, even as the long-running IDBI Bank privatisation process is likely moving closer to a conclusion. Fairfax has emerged as the frontrunner to acquire a combined stake of nearly 61% being sold by the government and Life Insurance Corporation (LIC). The government plans to sell 30.48%, while LIC is looking to offload another 30.24%.

The Economic Times reported earlier in July that Fairfax raised its offer to around Rs 81 per share, valuing the stake at roughly Rs 53,000 crore, or about $5.5 billion. The said price is over 2% below IDBI Bank's previous closing price of Rs 82.94 apiece.

Also read | Fairfax to acquire IDBI Bank stake in $5.5 billion deal, biggest foreign investment in Indian bank

The huge transaction will require Prem Watsa-owned Fairfax Holdings to also make an open offer to the public shareholders of IDBI Bank. The successful bidder in IDBI’s stake sale process will have to go through a final assessment by the Reserve Bank of India (RBI) to ensure that it meets the regulator’s ‘fit & proper’ standards. In addition, approvals will be needed from statutory and regulatory authorities, including the CCI.

Currently, Emirates NBD’s purchase of a 60% stake in RBL Bank for $2.75 billion in 2025 holds the position of the biggest foreign investment in a bank. Fairfax’s IDBI Bank stake acquisition is likely to top that.

IDBI Bank Q2 business update

Earlier this month, IDBI Bank released its provisional business update for the July-September quarter of FY27, reporting an 18% year-on-year increase in total business to Rs 6.27 lakh crore. Its total deposits rose 17% YoY to Rs 3.56 lakh crore.

The bank’s current account and savings account (CASA) deposits meanwhile increased 12% YoY to Rs 1.56 lakh crore, while net advances rose 18% YoY to Rs 2.72 lakh crore during the quarter under review.

What to expect for banks' Q2 earnings?

Overall, JM Financial noted that provisional business updates for 30 banks show loan growth accelerating sharply to 19% YoY and deposit growth to nearly 16% YoY, aided meaningfully by the FCNR-B mobilisation drive since June 2026. “We expect coverage NIMs to contract 5–20 bps QoQ, mainly for private banks due to FCNR-B inflows and muted CASA growth. Treasury income could come under pressure due to rising yields. On the positive side, opex growth (7% YoY) should continue to trail balance sheet growth (20% YoY), while credit costs remain benign at 50 bps, it said.

The key metrics to monitor are deployment trajectory or yields on FCNR deposits, impact of a potential rate hike, upcoming ECL transition and any stress in SME or unsecured loans, according to JM Financial. It named HDFC Bank, ICICI Bank, Axis Bank, Punjab National Bank (PNB), State Bank of India (SBI), Ujjivan Small Finance Bank, City Union Bank and DCB Bank as its preferred picks in the banking space.

Also read | Which bank stock should you buy ahead of Q2 results - HDFC Bank, ICICI Bank, Yes Bank or Axis Bank?

Disclaimer: This article has been written by Debaroti Adhikary, who is not a SEBI-registered Research Analyst or an Investment Adviser. Debaroti Adhikary and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here.