Niti Aayog and Finance Ministry Officials learnt to have zeroed in on Bank of Maharashtra (BoM) as the first public sector bank yesterday, seen going in for privatisation. It is learnt that it was decided to divest 51% stake in favour of NBFCs, having defined pre requisite financials, to get qualified for bidding. It is also learnt that private and public sector banks are prohibited from bidding.
 
BoM has 1,874 Branches, with 1.50 crore customers and is the largest bank in Maharahtra. On 18th February, in this section here, we gave the strong possibility of BoM seen as a  privatisation candidate in  FY 22, pursuant to FM having stated in her Budget speech, of atleast 2 PSB seen getting privatised in FY22 apart from IDBI Bank. Sensing this, share price of BoM rose from 21 to 27 or so in last 3 days, with UC band also now at 20%.

This privatisation move is likley to evince strong interest by NBFCs like Bajaj Finance, M&M, AB Capital, Magma Fin of Poonawala, Prem Watsa, L&T Fin, Tatas, Shriram, Cholamandalam, Piramal, while list is long, as all qualified NBFCs will be keen to convert them in bank.

Govt having tried similar model of part divesting its stake in Hind Zinc and Tata Communications (erstwhile VSNL) in 2002, while much higher amount got monetized from residual stake now, is thinking of doing the same here. Of its 93.33% stake, Govt may divest 51% and balance may be in the next 3 years or so. This can make the share to rise by over 40% in the next 3-4 months, once the news is made official.

This is not a buy recommendation, while stock recommendations are provided exclusively to our paid members in the Member Zone.