LIC Shares Down 50%? Here’s Why Investors Shouldn’t Panic

Life Insurance Corporation of India (LIC) shares appeared to tumble nearly 50 per cent on May 29 after the stock turned ex-bonus for its first-ever 1:1 bonus issue. The sudden drop on trading screens was only because of a stock price adjustment linked to the bonus shares, and not because investors lost money.

LIC shares opened at Rs 417.60 on the NSE on May 29 against the previous close of Rs 830 on May 27. Since Thursday was a market holiday on account of Bakri Id, the stock resumed trading directly on the ex-bonus date. After adjusting for the bonus issue, the stock was trading marginally lower by around 1 per cent during the session.

The state-run insurer had announced in April that it would issue one fully paid-up equity share for every existing equity share held by eligible investors. The company fixed May 29 as the record date for determining shareholder eligibility.

Under the bonus issue, LIC will capitalise up to Rs 6,325 crore from its reserves to issue the additional shares. As of December 31, 2025, the insurer’s reserves and surplus stood at nearly Rs 1.5 lakh crore.

The bonus issue marks the first such corporate action by LIC since its stock market debut in May 2022. The company currently has more than 21 lakh shareholders.

Investors who purchased LIC shares on or before May 27 will be eligible to receive the bonus shares, considering India follows a T+1 settlement cycle. Since May 28 was a trading holiday, My 27 became the last effective date to buy the stock for bonus eligibility. Investors purchasing the stock on May 29 will not qualify for the additional shares.

The stock had seen increased investor interest in recent sessions ahead of the ex-date, partly due to expectations that a lower post-bonus share price could improve affordability and liquidity for retail participants.

The bonus issue also comes close on the heels of LIC’s March quarter earnings. The insurer reported a net profit of around Rs 23,420 crore for Q4 FY26, up 23 per cent year-on-year. The company also declared a final dividend of Rs 10 per share alongside the bonus announcement.

Market participants are also tracking reports around a possible government stake sale in LIC. According to reports, the Centre may look to divest around 2 per cent stake in the insurer through an offer-for-sale route in the coming months.

How The Bonus Issue Adjustment Works

A bonus issue increases the number of shares held by investors without changing the overall value of their investment at the time of adjustment.

In LIC’s case, the company announced a 1:1 bonus issue. This means shareholders will receive one additional share for every one share already held.

Suppose an investor owned one LIC share priced at Rs 830 before the ex-bonus date.

After the 1:1 bonus issue:

• The investor now owns two shares instead of one

• Since the number of shares doubles, the stock price gets adjusted proportionately

• The adjusted price becomes roughly Rs 415 per share

So earlier:

• 1 share × Rs 830 = Rs 830 total value

After bonus adjustment:

• 2 shares × Rs 415 = Rs 830 total value

This is why the stock price appears to fall sharply on the ex-bonus date, even though the investor’s total holding value remains largely unchanged.

The adjustment is purely mathematical and is carried out by exchanges to reflect the increased number of shares in circulation. It does not indicate a crash in the company’s business or financial performance.

For investors, bonus issues generally improve stock liquidity and lower the per-share price, making the stock more accessible to a wider pool of market participants.

Frequently Asked Questions

Q1. Why did LIC shares fall nearly 50 per cent on May 29?
LIC shares turned ex-bonus for the company’s first-ever 1:1 bonus issue, leading to a technical adjustment in the stock price. The fall was not an actual crash or wealth erosion for investors.

Q2. Who is eligible to receive LIC’s bonus shares?
Investors who bought LIC shares on or before May 27, 2026, are eligible for the bonus shares, considering the T+1 settlement cycle and the May 29 record date.

Q3. Did LIC investors lose money after the bonus issue adjustment?
No. While the share price adjusted lower, shareholders will receive additional shares under the 1:1 bonus issue, keeping the overall value of their investment broadly unchanged.