Shares of Life Insurance Corporation of India (LIC) traded around ₹412.70 on Friday after the company’s first-ever 1:1 bonus issue officially came into effect, leading to a sharp technical adjustment in the stock price. While the stock appeared to have fallen nearly 50% in a single session, market experts clarified that the decline was purely because of the bonus adjustment and not due to any negative development in the company.
Under the 1:1 bonus issue, shareholders will receive one additional share for every existing share they hold. As a result, the number of shares owned by investors doubles, while the market price adjusts proportionately to maintain the same overall investment value.
For example, if an investor held 100 LIC shares priced at around ₹825 before the bonus issue, the investment value would be approximately ₹82,500. After the bonus adjustment, the investor would hold 200 shares priced near ₹412.50 each, leaving the overall portfolio value broadly unchanged.
LIC had earlier fixed May 29, 2026, as the record date for determining eligible shareholders for the bonus allotment. Investors who held shares as of the record date will receive the additional bonus shares in their demat accounts after the corporate action process is completed.
The bonus issue is significant because it is the first such corporate action undertaken by LIC since its stock market listing in May 2022. The board approved the proposal in April 2026, and shareholders later gave overwhelming approval to the plan.
The state-owned insurance giant announced the bonus issue alongside its FY26 earnings and a final dividend of ₹10 per share. The move was widely viewed as an attempt to improve stock liquidity, increase retail participation, and reward long-term shareholders.
Before the ex-bonus adjustment, LIC shares had witnessed strong buying interest, rising nearly 6% in two sessions as investors positioned themselves ahead of the record date. Brokerages had also turned positive on the stock following its earnings announcement and bonus declaration.
Market analysts noted that bonus issues do not create immediate wealth for investors because the share price adjusts in line with the increased share count. However, they can improve liquidity, make shares appear more affordable to retail investors, and often boost market participation.
LIC’s bonus issue involves capitalising approximately ₹6,325 crore from reserves, effectively doubling the company’s paid-up share capital. Despite the increase in the number of outstanding shares, the insurer’s overall market capitalisation remains broadly unchanged immediately after the adjustment.
The stock has remained in focus not only because of the bonus issue but also due to recent reports suggesting a possible government stake sale in the insurer. Market participants are closely monitoring developments related to future divestment plans and LIC’s long-term growth trajectory.
With the bonus issue now effective, investors will next watch for the credit of bonus shares into demat accounts and the company’s future performance as India’s largest life insurer continues expanding its market presence.
