1:1 Bonus Issue: Investors cheer free shares announcement; LIC stock zooms over 4%

LIC Bonus Issue: Shares of Life Insurance Corporation of India (LIC) rose sharply in Wednesday’s trade after the insurer announced its first-ever bonus issue. The stock gained over 4 per cent to touch intraday high of 837.75 after the company said its board has approved the issuance of bonus equity shares in a 1:1 ratio.

LIC share price

At the time of writing, the stock was trading at Rs 832.40, up Rs 28.75 or 3.58 per cent for the day. The stock opened at Rs 830.00 and moved in a range of Rs 824.60 to Rs 837.75 during the session. LIC’s market capitalisation stood at around Rs 5.26 lakh crore, while the stock remains below its 52-week high of Rs 980.00 and above its 52-week low of Rs 721.50.

Bonus issue: What has LIC announced?

LIC said shareholders will receive one fully paid-up equity share of face value Rs 10 for every one existing share held, as on the record date. This effectively doubles the company’s paid-up equity share capital.

The insurer plans to issue these bonus shares within two months from the date of approval, that is on or before June 12. However, the proposal remains subject to shareholder approval and regulatory norms.

This marks the first bonus issue by LIC since its listing in May 2022.

Capital structure to expand

The bonus issue will significantly alter LIC’s capital base. The company’s current paid-up equity share capital of Rs 6,324.99 crore will rise to Rs 12,649.99 crore post issuance.

LIC’s authorised equity share capital stands at Rs 25,000 crore. As of December 31, 2025, the insurer reported reserves and surplus of Rs 1,46,440.58 crore, providing strong backing for the bonus issuance.

Management commentary: focus on shareholder returns

In an exchange filing, R Doraiswamy, CEO and MD, said LIC has been consistently rewarding shareholders since listing through dividends, with payouts rising from Rs 1.50 per share to Rs 12 per share over time.

He added that the bonus issue reflects the company’s ongoing efforts to enhance shareholder value. The management also highlighted that transformation initiatives are beginning to deliver tangible results and are expected to drive better outcomes going forward.

Financial performance remains strong

LIC reported a steady financial performance in recent quarters, supporting investor sentiment.

On a consolidated basis, LIC’s net profit rose 17.46 per cent year-on-year to Rs 12,930.44 crore in Q3 FY26, compared with Rs 11,008.65 crore in the same quarter last year.

Net premium income climbed 17.76% year-on-year, reaching Rs 1.26 lakh crore, a sign of persistent demand even in a crowded insurance landscape.

A standout feature was the substantial increase in first-year premium, which surged 45.2% year-on-year to Rs 10,648.46 crore. This suggests robust growth in new policy sales and the generation of fresh business.

Business mix and margins are also on the rise.

LIC has demonstrated an improved quality of its business mix.

According to the exchange filing, the proportion of non-participating products in individual business, measured on an APE basis, climbed to 36.46%. This was up from 27.68% the previous year.

The Value of New Business (VNB) margin improved to 18.8% for the first nine months of FY26, up from 17.1% the previous year.

This shift toward non-participating products and higher margins is viewed favorably for long-term profitability.

Shareholding pattern

Regarding shareholding, as of December 31, 2025, the promoter and promoter group maintained a significant 96.50% stake in LIC.