LIC Stock Surges 3% Amid Market Reaction to 1:1 Bonus Issue

LIC Shares Surge 3.5% on Announcement of 1:1 Bonus Issue

Shares of the Life Insurance Corporation of India (LIC) rose significantly on Wednesday, with the stock gaining as much as 3.5%. The surge in the stock price was largely attributed to the PSU insurer's announcement of a 1:1 bonus issue, its first since listing. At approximately 10:30 am, LIC shares were trading at Rs 831.5 on the National Stock Exchange (NSE).

The stock saw substantial buying interest after the company revealed that its board had approved the issuance of bonus equity shares in a 1:1 ratio, capitalizing Rs 6,325 crore from its reserves. The announcement was made after market hours on Monday, while markets remained shut on Tuesday due to a holiday. This led to a delayed market reaction on Wednesday.

A 1:1 bonus issue means that shareholders will receive one additional share for every share held, effectively doubling the number of shares outstanding. However, the share price typically adjusts proportionately post the record date. The move involves converting a portion of LIC's reserves into share capital, without any cash outflow from the company.

The bonus issue is expected to improve liquidity in the stock and make it more accessible to a wider set of investors after the price adjustment. The development also assumes significance in the context of the government's stake in LIC. The Centre currently holds 96.5% in the insurer and is required to reduce its holding over time to meet minimum public shareholding norms. The bonus issue could aid future stake sales through an offer for sale (OFS) by expanding the equity base.

| Company | 1-Year Stock Return | | --- | --- | | LIC | 6% | | Nifty 50 | 4% |

At current levels, the insurer commands a market capitalization of around Rs 5.25 lakh crore. The company has maintained a steady dividend payout track record since listing. It declared a final dividend of Rs 12 per share in May 2025, higher than Rs 6 per share in the previous year, along with an interim dividend of Rs 4 per share in February 2024. Earlier, LIC had announced a final dividend of Rs 3 per share in 2023 and Rs 1.5 per share in 2022 following its listing.