The Government of India currently holds 96.5 percent in LIC 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.

LIC stock rises over 3% today as Street reacts to 1:1 bonus issue; first since listing

Shares of Life Insurance Corporation of India (LIC) rose on Wednesday, gaining as much as 3.5 percent, as investors reacted to the PSU insurer’s announcement of a 1:1 bonus issue -- its first since listing. At about 10.30 am, LIC shares were trading at Rs 831.5 on NSE.

The stock saw buying interest after the company said its board has approved issuance of bonus equity shares in a 1:1 ratio by capitalising Rs 6,325 crore from its reserves. The announcement was made after market hours on Monday, while markets remained shut on Tuesday on account of a holiday, leading to a delayed market reaction on Wednesday.

A 1:1 bonus issue means shareholders will receive one additional share for every share held, effectively doubling the number of shares outstanding, though 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.

Share Markets Live Updates | Sensex, Nifty Today

The bonus issue is likely 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 percent 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.

LIC’s stock has gained about 6 percent over the past one year, compared with a roughly 4 percent rise in the Nifty 50 during the same period. At current levels, the insurer commands a market capitalisation 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.