PSU bank stock falls 4% after Government likely to sell its stake at over 5% discount

Synopsis:
Bank of Maharashtra plunged sharply from the day’s high after reports emerged that the government might sell a 5 percent stake in the company at a discount of over 5 percent.

The shares of one of the largest PSU banks in India are in focus after a key report on the government potentially divesting its stake in the bank. In thai article, we will dive much deeper into it.

With a market capitalisation of Rs 44,196 crore, the shares of Bank of Maharashtra Ltd reached a day’s low of Rs 57.25 per share, down 4 percent from its day’s high price of Rs 59.66 per share. Over the past five years, the stock has delivered a robust return of 305 percent, outperforming NIFTY 50’s return of 98 percent.

About the Report

According to reports, the government might sell a 5 percent stake in Bank of Maharashtra to the public to meet the minimum public shareholding requirements, which is a 25 percent minimum public shareholder requirement. The sale will probably be executed at a price that is more than 5 percent lower than the current market price.

As the Centre’s stake is 79.6 percent, the selling of 5 percent may bring in about Rs 1,800 crore. Earlier this year, the bank had raised Rs 3,500 crore through a QIP in 2024 to infuse fresh capital and get closer to the required norms. PSU banks are still under the spotlight, as the government is discussing the next phase of consolidation with the RBI. 

Additionally, a few days ago, reports emerged that the government might increase the foreign direct investment (FDI) in publicly sector banks (PSBs) from the current 20 percent to 49 percent, which can bring in more capital and boost competitiveness. 

In​‍​‌‍​‍‌​‍​‌‍​‍‌ this expansive plan to consolidate, it is anticipated that the six small publicly owned banks, Indian Overseas Bank, Central Bank of India, UCO Bank, Bank of India, Bank of Maharashtra, and Punjab & Sind Bank, will be amalgamated with the larger ones. The idea is that by merging them with the financially stronger banks, the banks will be able to create fewer but more stable and stronger banks, which will be able to meet India’s credit and economic growth requirements in the long ​‍​‌‍​‍‌​‍​‌‍​‍‌run and increase the competitiveness globally.

Financial Highlights

Bank of Maharashtra reported a Net Interest Income (NII) of Rs 3,248 crore in Q2 FY26, representing a 16 percent growth from Rs 2,807 crore in Q2 FY25. However, it recorded a slight decline of 1.3 percent from its previous quarter figure of Rs 3,292 crore. However, NIM slightly declined by 13 bps to 3.85 percent in Q2 FY26.

Coming to its profitability front, Bank of Maharashtra reported a net profit of Rs 1,633 crore in Q2 FY26 as compared to Rs 1,327 crore in Q2 FY25, which is a growth of 23 percent. Additionally, it recorded a slight growth of 2.5 percent from its previous quarter figure of Rs 1,593 crore.

Bank of Maharashtra’s asset quality slightly improved during the period. GNPA declined by 12 bps to 1.72 percent as compared to 1.84 percent in Q2 FY25. Also, NNPA declined by 2 bps and currently stands at 0.18 percent as compared to 0.20 percent in Q2 FY25. Provision Coverage Ratio largely remained stable at 90.37 percent.

Bank of Maharashtra’s total deposits have grown by 12 percent to Rs 3,09,791 crore in Q2 FY26 as against Rs 2,76,289 crore in Q2 FY25. CASA deposits were Rs 1,55,979 crore, with current account deposits at Rs 39,612 crore and Savings Account deposits at Rs 1,16,367 crore. CASA deposits accounted for 50.35 percent of the total deposits as of September 30, 2025. It reported total advances of Rs 2,50,188 crore in Q2 FY26, which grew by 17 percent YoY and 5.4 percent QoQ.

 Written by Satyajeet Mukherjee

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