IDBI Bank to Union Bank of India: These 4 bank stocks to watch ahead of NSDL IPO

NSDL IPO: India's largest depository, National Securities Depository Limited (NSDL), is set to launch its initial public offering (IPO) in March. The ₹3,000 crore public issue is entirely an offer for sale (OFS) of up to 5.73 crore shares.

Four banking stocks—IDBI Bank, Union Bank of India, State Bank of India, and HDFC Bank—are expected to be in focus ahead of the IPO. These stocks may attract investors' attention as they are the selling shareholders of the issue.

NSDL IPO details

NSDL IPO is entirely an OFS, which means the net proceeds will not go into the company's balance sheet but into the coffers of institutions offloading their shareholding in NSDL.

IDBI Bank, Union Bank of India, SBI, and HDFC Bank are selling their stakes through the NSDL's public issue. The net proceeds are expected to boost these Indian banks' balance sheets.

Some experts believe the NSDL IPO may positively impact the quarterly numbers of IDBI Bank, Union Bank of India, SBI, and HDFC Bank.

According to the company's Draft Red Herring Prospectus (DRHP), IDBI Bank will offload up to 2.22 crore shares, and Union Bank of India will sell up to 56.25 lakh shares in the OFS.

SBI and HDFC Bank both are selling up to 40 lakh shares in the issue.

Apart from these four banks, NSE is selling 1.80 crore shares, and the administrator of the specified undertaking of the Unit Trust of India is selling up to 34.15 lakh shares in the OFS.

"NSDL IPO is entirely an OFS, which means net proceeds of the public issue will go into the promoters' balance sheet instead of the company's balance sheet. As IDBI, Union Bank of India, SBI and HDFC Bank are selling their stake through the NSDL's public issue, the net proceeds are expected to boost the balance sheet of these Indian banks. Hence, we can expect a better or improved quarterly number from DBI, Union Bank of India, SBI and HDFC Bank due to the NSDL IPO. So, bulls' are expected to bet high on IDBI, Union Bank of India, SBI and HDFC Bank shares ahead of the NSDL IPO opening," Anshul Jain, Head of Research at Lakshmishree Investment and Securities, observed.

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