LIC Announces First-Ever Bonus Shares Issue; 1:1 Ratio Declared, Record Date Pending

Life Insurance Corporation of India (LIC) has announced its maiden bonus share issue, marking a significant milestone for shareholders. The move signals confidence in the company’s financial strength while aiming to improve liquidity and investor participation.

LIC Declares 1:1 Bonus Share Issue

In a major corporate development, LIC’s board of directors has approved the issuance of bonus equity shares in a 1:1 ratio. This means shareholders will receive one additional share for every existing share they hold.

The announcement was made through an exchange filing after market hours. However, the company has not yet disclosed the record date, which will determine shareholder eligibility for receiving bonus shares. The issuance remains subject to approval by shareholders.

Stock Performance and Market Position

Following the announcement, LIC shares closed at ₹804.25, registering a modest gain of 0.71% for the day. The company currently commands a market capitalisation of approximately ₹5.10 lakh crore, reinforcing its position as one of India’s largest financial institutions.

Despite this, the stock continues to trade below its initial public offering (IPO) price of ₹949. Additionally, it remains about 32% lower than its all-time high of nearly ₹1,180, achieved in August 2024.

Impact on Share Capital Structure

The bonus issue will significantly alter LIC’s share capital structure. Currently, the company’s authorised equity share capital stands at ₹25,000 crore, while its paid-up capital is ₹6,324.99 crore.

After the 1:1 bonus issue, the paid-up equity capital is expected to double to ₹12,649.99 crore. Similarly, the number of outstanding shares will increase from approximately 6.32 billion shares to 12.64 billion shares.

This expansion reflects a conversion of reserves into equity, a common practice among financially strong companies.

Understanding the Impact on Shareholders

A bonus issue is a corporate action where additional shares are distributed to existing shareholders at no extra cost. In LIC’s case, investors will see their number of shares double once the bonus shares are credited.

However, it is important to note that the overall value of the investment remains unchanged. On the ex-bonus date, the stock price typically adjusts proportionately. In a 1:1 bonus scenario, the share price is expected to be halved to reflect the increased number of shares.

For example, if the stock trades at ₹800 before the bonus, it may adjust to around ₹400 after the bonus, while the investor’s total holding value remains the same.

No Change in Face Value or Ownership Structure

One key aspect of LIC’s bonus issue is that the face value of the shares will remain unchanged at ₹10 per share. Additionally, the proportionate ownership of shareholders will not be affected.

This means that while investors will hold more shares, their percentage stake in the company will remain the same. There is also no additional financial burden on shareholders, as bonus shares are issued free of cost.

Why Companies Issue Bonus Shares

Companies like LIC issue bonus shares for several strategic reasons. One of the primary objectives is to reward existing shareholders without distributing cash.

Bonus issues also enhance stock liquidity by increasing the number of shares available in the market. A lower share price post-bonus can make the stock more accessible to retail investors, potentially boosting trading volumes.

Moreover, such corporate actions often signal strong financial health and confidence in future growth prospects.

LIC Q4FY26 Performance Expectations

Brokerage firms have shared optimistic projections for LIC’s financial performance in the fourth quarter of FY26.

YES Securities estimates that LIC’s new business premium (NBP) could reach ₹73,760.1 crore, reflecting a 31% quarter-on-quarter (QoQ) growth. The annual premium equivalent (APE) is projected at ₹18,343.4 crore, indicating a 23% QoQ rise.

The value of new business (VNB) is expected to touch ₹3,898 crore, showing both year-on-year and sequential growth. Analysts also anticipate a slight improvement in margins due to changes in product mix.

Brokerage Outlook and Ratings

Emkay Global expects LIC’s APE to grow by 13% in Q4FY26, driven by strong performance in the group insurance segment. The firm projects a VNB margin of 20.5% for the quarter and maintains a ‘buy’ rating with a target price of ₹1,000.

B&K Securities forecasts revenue of ₹5,792.1 crore, with EBITDA margins improving to 20.2%. It has assigned a ‘hold’ rating to the stock.

Meanwhile, Antique Stock Broking expects a VNB of ₹12,690 crore for FY26 and maintains a ‘buy’ rating with a target price of ₹970.

JM Financial has also retained a ‘buy’ recommendation, setting a higher target price of ₹1,300 per share.

Dividend Track Record

Since its listing in May 2022, LIC has consistently rewarded shareholders through dividends. The company has declared five dividends so far:

• ₹1.50 per share in August 2022
• ₹3 per share in July 2023
• ₹4 interim dividend in February 2024
• ₹6 final dividend in July 2024
• ₹12 final dividend in July 2025

This steady dividend history highlights LIC’s commitment to delivering value to its investors.

IPO Journey and Current Valuation

LIC’s shares were listed on the stock exchanges in May 2022 after raising ₹20,557 crore through one of India’s largest IPOs. The company offered discounts of ₹45 to employees and ₹60 to policyholders.

Despite its strong fundamentals, the stock is currently trading below its IPO price and all discounted issue prices, reflecting broader market conditions and sector-specific challenges.

Conclusion

The announcement of LIC’s first-ever bonus share issue marks a significant development for investors. By doubling the number of shares and improving liquidity, the move is expected to enhance market participation. While the immediate financial value for shareholders remains unchanged, the long-term benefits could include improved accessibility, better trading volumes, and positive investor sentiment. As the market awaits the record date announcement, all eyes will also be on LIC’s upcoming financial results and its ability to sustain growth in a competitive insurance landscape.