Banking Stock: IDBI Bank Has 120 Properties In 7 Cities, Deferred Tax Assets Worth Rs 11,520 Crore

Mumbai-headquartered government-owned lender, IDBI Bank's share price is in focus on Monday after the Department of Investment and Public Asset Management (DIPAM) in pre-bid queries revealed that the bank has deferred tax assets worth a whopping Rs 11,520 crore and 120 properties in 7 cities. DIPAM's announcement is ahead of LIC and the government of India's disinvestment in IDBI Bank.

DIPAM received multiple Expressions of Interest (EOI) for IDBI Bank's divestment, and is currently searching for an asset valuer to carry out t the fair valuation of all the assets and liabilities appearing on the balance sheet of
IDBI Bank for its strategic sale.

According to DIPAM's notification, IDBI Bank has approximately 120 properties in major cities with most of the properties being the country's financial hub, Mumbai to the tune of 68. This is followed by 20 properties in Pune, 9 properties in Chennai, 7 in Ahmedabad, 6 in Kolkata, and 5 each in Hyderabad and Delhi.

DIPAM said that these properties comprise nearly 94% of the written-down value of fixed assets of IDBI Bank. Also, physical fixed assets like land and buildings etc. constitute approximately only 3% of the total assets.

Apart from this, in regards to the intangible assets, DIPAM said that the intangible on the balance sheet of IDBI Bank primarily comprises deferred tax assets of around Rs 11,520 Crore.

A Deferred Tax Asset is an item of the balance sheet that ultimately either reduces the income tax liability of an entity for future periods or results in a refund of an already paid amount of income tax, explains the Income Tax department.

India's largest life insurer LIC and government are looking to offload 61% of their stake in IDBI Bank as part of their strategic sale plan. For this, the due date to submit bids by the asset valuer is scheduled for October 30.

"The ultimate accountability and responsibility is cast on the Asset Valuer," DIPAM said on the fair valuation of IDBI Bank.

As of June 30, 2023, LIC's shareholding in IDBI Bank is 5,29,41,02,939 equity shares or 49.24%, making it the largest shareholder in the bank. While the President of India holds 4,88,98,71,903 equity shares or 45.48% stake in the lender.

Together, LIC and the government hold 10,18,39,74,842 equity shares or 94.71% stake in IDBI Bank.

At the time of writing, IDBI Bank's share price traded at Rs 70.36 apiece, down by 0.9% on BSE. Its market value stood at nearly Rs 75,654 crore. In the early trade, the stock dipped over 1.4% with an intraday low of Rs 69.99 apiece.