LIC Shareholders Receive 1:1 Bonus Share Issue Amidst Market Turbulence

LIC Shares Plunge 49.87% in Early Trade After Ex-Bonus Adjustment

Shares of Life Insurance Corporation of India (LIC) appeared to have plummeted nearly 50 percent in early trade on Friday, with the state-run insurer's stock trading at Rs 416.10 after the company's first ever 1:1 bonus share issue adjustment. This sharp fall, however, does not reflect a destruction of shareholder value.

The adjustment in share price was a result of LIC's stock becoming ex-bonus on May 29, the record date fixed for the company's 1:1 bonus issue. Under the bonus issue, shareholders will receive one additional equity share for every one share held. Adjusted for bonus, the LIC stock is actually marginally up today, by about 0.2 percent.

Over the last one year, the stock is down 11.9 percent. LIC had announced the bonus issue in April, marking the first such corporate action since its stock market listing in 2022. The insurer's board had approved the issuance of bonus shares in the ratio of 1:1, effectively doubling the company's paid-up equity share capital.

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The insurer had subsequently fixed May 29 as the record date for determining eligible shareholders. Investors holding LIC shares as of the record date will receive one bonus share for every share owned. LIC's bonus issue had drawn significant investor attention over the past few sessions, with the stock rallying ahead of the ex-date amid expectations of improved liquidity and broader retail participation following the increase in the number of outstanding shares.

The bonus issue comes shortly after LIC reported a strong set of earnings for the fiscal fourth quarter. The insurer reported a 23 percent year-on-year rise in Q4 net profit to around Rs 23,420 crore for Q4 FY26, while total income also increased during the quarter. The company had also announced a final dividend of Rs 10 per share along with its first-ever bonus issue.

LIC remains among the country's largest listed financial institutions. Following Friday's ex-bonus adjustment, the insurer's market capitalisation stood at around Rs 2.65 lakh crore, according to exchange data and market prices in early trade.

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