Why Are LIC Shares Falling Ahead Of Bonus Issue? Govt Stake Sale Buzz, Dividend, Record Date Explained

Shares of Life Insurance Corporation of India (LIC) slipped more than 3.5% in Wednesday's trade even after the insurance giant announced a blockbuster combination of a 1:1 bonus share issue, final dividend payout and record FY26 earnings.

At the time of writing, LIC shares were trading around Rs. 827.50 on the NSE during the noon session, down 3.21% from the previous close.

The decline in LIC share price today is mainly because of the profit booking and adjustment ahead of the bonus issue record date and fresh reports suggesting that the government may soon dilute its stake in the insurer through a large institutional sale.

Government May Sell 2% Stake In LIC

According to a Bloomberg report, the government is planning to sell around 2% stake in LIC in late June or early July through a stake sale only for institutional investors. The proposed transaction is expected to help the government raise nearly $1 billion, equivalent to around Rs. 9,000 crore.

LIC Bonus Issue 2026

LIC's board has approved a 1:1 bonus share issue, under which shareholders will receive one additional fully paid-up equity share of face value Rs. 10 for every one existing share held.

The insurer has fixed Friday, May 29, 2026, as the record date for determining shareholders eligible for the bonus issue. Since stock markets will remain closed on Thursday, May 28, due to Bakrid, investors must purchase LIC shares on or before Wednesday, May 27 to qualify for the bonus shares under the T+1 settlement cycle.

The expected date for the allotment for the bonus shares has been scheduled for Monday, June 1, 2026.

LIC Dividend 2026 Announced

Alongside the bonus issue, LIC has also announced a final dividend of Rs. 10 per equity share for FY26. On a pre-bonus basis, this effectively translates into Rs. 20 per share.

The dividend proposal remains subject to shareholder approval during the company's 5th Annual General Meeting. LIC has fixed June 25, 2026, as the record date for determining eligible shareholders for the final dividend payout.

LIC Reports Record FY26 Profit

The announcements came alongside a strong earnings performance for both the March quarter and the full financial year FY26.
LIC reported a 23.18% year-on-year rise in consolidated net profit to Rs. 23,420.43 crore during Q4FY26.

For the full FY26 financial year, LIC posted a record net profit of Rs. 57,419 crore, up 19.25 per cent from Rs. 48,151 crore reported in FY25.
Net premium income during the March quarter rose 12 per cent year-on-year to Rs. 1.65 trillion, while net investment income increased 17 per cent to Rs. 1.09 trillion.

Brokerage View On LIC Shares

Global brokerage Bernstein maintained a "Market Perform" rating on LIC with a target price of Rs. 900.

According to the brokerage, LIC witnessed healthy top-line growth with new sales rising 22 per cent year-on-year during Q4 and 18 per cent growth during FY26, driven largely by strong non-par product sales.

Bernstein also said that LIC's margins improved during FY26 because of a better product mix and favourable yield curve movements. Management indicated that margins could gradually converge closer to private insurance peers over the medium term.

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