IDBI Bank shares in early trade on June 29, 2020 were locked in 5% upper circuit at Rs. 41.75 per share on the BSE, hitting 52-week high price. On the NSE, the stock hit a 52-week high price of Rs. 42.
The rally comes after the bank said its board has given a go-ahead for divesting 27% stake in IDBI Federal Life Insurance at a financial consideration of Rs 595 crore.
IDBI Bank has 48% stake IDBI Federal Life Insurance, while Federal Bank and its Dutch associate firm Ageas Insurance International NV have 26% stake each in the insurance JV venture.
"The board of directors, at its meeting held on Friday, June 26, 2020, has approved to sell IDBI Bank's stake in IDBI Federal Life Insurance Company to the extent of 23 per cent to Ageas and 4 per cent to Federal Bank at a combined value of about Rs 595 crore," IDBI Bank said in a regulatory filing.
The stake sale is subject to all regulatory approvals to be taken by all related parties and agreements which are yet to be finalised, it said.
For the quarter ended March of FY20, the bank posted profit for the first time in last 14 quarters. Profit before tax at the bank came in at Rs. 289.66 crore on the back of encouraging increase in net interest income and a sharp decline in contingencies and provisions. In comparison in the same period last year, the bank posted a loss before tax of Rs. 7136.90 crore.
In the last 1-month, the counter has surged over 100% from Rs. 20.40 as at the close of May 29, 2020.
At around 11:36 am, the stock of IDBI Bank traded with gains of 2.64% or Rs. 1.05 at Rs. 40.85 per share on the BSE.