IDBI Bank Shares Crashed After Fairfax Deal; Should You Buy This to Reap Profits Later? Will They Rise? Experts' Views

The government sells 30.48% and LIC sells 30.24%, taking the combined sale to 60.72%. After the deal the government keeps 15% and LIC keeps 19%. IDBI Bank shares were already down about 10% over one year and 19% in 2026 before this fall.

This guide explains the deal terms, the valuation arguments, what experts say, the open offer and the risks, so you can judge the question in the headline. An earlier Univest article covers the deal basics, and this one focuses on the investor view. It is educational and not a recommendation.

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Why IDBI Bank Shares Fell After the Fairfax Deal

Item	Detail	Source note
Stake sold	60.72%: government 30.48%, LIC 30.24%	Free Press Journal, Equentis
Deal value	Rs 52,878 crore, Cabinet cleared	Reported
Price per share	Rs 81	Equentis, Business Standard
Previous close	About Rs 90 (Rs 89.85 to Rs 90.40 depending on source)	Sources differ
Low on 15 Oct	Rs 83.70, down 7.45%	Free Press Journal
Market value lost	About Rs 6,500 crore	Equentis
Pending	RBI fit and proper check, CCI, SEBI, definitive agreements	Fairfax statement of 14 Oct

The fall came after a sharp rally earlier in the week, so part of the drop is profit booking. Equentis also cites disappointment that the deal price of Rs 81 is below the market price. These are reported explanations and not confirmed causes.

Risk: Cabinet approval did not complete the deal, because the definitive agreements had not been signed on 14 October.

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IDBI Bank Shares Valuation: Is Rs 81 Good Value or Fair?

Measure	Figure	Who says
Independent valuation (average of two)	Rs 75.99	Business Standard
Earlier bid rejected	Rs 75, against a reserve price of Rs 94.42	Business Standard
Price to book value	About 1.2 times (Biyani) or 1.46 times on a book value of Rs 55.41 (The Next Read)	Estimates differ
Price to earnings	About 9 times (9.2 times on EPS of Rs 8.85)	Both
Premium to undisturbed price	About 15% over Rs 70.38 on 18 May	Biyani; The Next Read
Discount to last close	About 10%	Reported

My check: Rs 81 divided by Rs 55.41 is about 1.46 and Rs 81 divided by Rs 8.85 is about 9.2, so The Next Read figures match its inputs. The difference with Biyani's 1.2 times probably comes from the book value used, but the article does not say.

The government argues the price of IDBI Bank shares was inflated by takeover hopes and thin trading, since the government and LIC held close to 95% before the sale. The independent valuation used accounts to 31 March 2026.

Risk: Valuation methods give different answers, so no single multiple settles the question.

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What Experts Say About IDBI Bank Shares

Voice	View
Biyani	A control premium of about 15% over the undisturbed price is reasonable; the market price reflects scarcity of free float
Iyer	The independent valuation should be examined for assumptions, peer multiples and asset adjustments; core margins have moderated
The Next Read (Rushabh Shah)	Good value for control of a bank with 0.15% net NPAs and a 26.65% capital ratio, but minority holders got liquidity, not a premium
CareEdge	FY26 profit was lifted by provision reversals; net interest margin fell from 3.95% to 3.18%
EAS Sarma	Objects to the 49% foreign ownership limit for new private banks

These are commentators and analysts of different kinds, and I did not find any brokerage rating or target price for IDBI Bank shares after the deal. The Next Read piece is a personal analysis, and its conclusion is the author's own.

Risk: If profit was inflated by provision write-backs, the multiple on normal earnings is higher than 9 times.

Open Offer, Free Float and What Minority Holders Face

Point	Detail	Status
Mandatory open offer	Up to 26%, roughly 280 crore shares or about Rs 22,600 crore at Rs 81	One author's calculation; unverified
Offer price rule	Higher of Rs 81 and the 60 day average market price	One author; unverified
Public shareholders	About 5.28%, about Rs 4,600 crore at Rs 81	One author
Expected completion	By March 2027	One author
IDBI Bank shares versus deal price	About Rs 84 against Rs 81, around 4% above (my calculation)	Price on 15 Oct

If the open offer works as described, Rs 81 may act as a floor for holders of IDBI Bank shares, but with the stock above Rs 81 few holders would tender. Equentis does not mention an open offer, so check the SEBI filings.

After closing, the government's 15% and LIC's 19% are an overhang on IDBI Bank shares, since LIC is reported to cut to 15% within two years. Fairfax has also proposed adding Digit Insurance and IIFL Capital to the bank, subject to approval.

Risk: A thin float means sharp swings in both directions, as seen from the 13% jump earlier in the week to the 7% fall.

Should You Buy IDBI Bank Shares to Reap Profits Later?

Case for buying IDBI Bank shares	Case against
A professional owner may raise returns on assets	Price is already close to the deal price
Thin float can lift IDBI Bank shares on good news	Same thin float causes sharp falls
Open offer may set a floor at Rs 81	Completion is not certain until approvals arrive
Low NPAs and a high capital ratio	Margin has fallen and profit had write-back help

The payoff depends on how fast Fairfax can improve margins and whether the market has already priced the improvement. Investors who buy for a quick gain face event risk until the approvals come.

What to Watch Next

1. Signing of definitive agreements and the RBI fit and proper decision for IDBI Bank shares
2. CCI clearance and the SEBI open offer filing
3. The Q2 results of the bank, for margin and credit cost, which drive IDBI Bank shares
4. Fairfax plans for Digit Insurance, IIFL Capital and CSB Bank
5. Brokerage notes with target prices for IDBI Bank shares

Conclusion

IDBI Bank shares fell because the Rs 81 deal price is below the recent market price, while experts split on whether it is good value or fair. The approvals, the open offer and earnings quality will decide the outcome, so treat any buy for profits later as a high risk idea.

Frequently Asked Questions

Why did IDBI Bank shares fall after the Fairfax deal?

Ans. The deal price of Rs 81 is about 10% below the previous close, and the stock had rallied sharply before, so profit booking added to the fall.

What is the Fairfax deal for IDBI Bank shares?

Ans. A Fairfax backed buyer will acquire 60.72% for Rs 52,878 crore, with 30.48% from the government and 30.24% from LIC.

Is Rs 81 a fair price for IDBI Bank shares?

Ans. It is about 6.6% above an independent valuation of Rs 75.99 and about 15% above the pre-bid price, but about 10% below the last close. Experts disagree.

Will there be an open offer for IDBI Bank shares?

Ans. One author says a mandatory offer for up to 26% will follow at not less than Rs 81, but other reports do not mention it, so check the SEBI filings.

Should I buy IDBI Bank shares to reap profits later?

Ans. That depends on your risk limit. The gain depends on Fairfax lifting returns, and approvals are pending, so this article does not recommend it.

What approvals are pending for IDBI Bank shares?

Ans. The RBI fit and proper assessment, CCI clearance, the SEBI open offer and the signing of definitive agreements.

When will the deal be completed?

Ans. One analyst expects completion by March 2027, but no official date is confirmed.

Is this article investment advice?

Ans. No. It is educational and not a recommendation to buy or sell.