LIC Share Price Slips After Government Nod for OFS | What’s Next for the Insurance Giant?

Market Performance

The Life Insurance Corporation of India share price declined by over 1% in early trade on Thursday, July 10, following reports of government clearance for an Offer for Sale (OFS).

• Opening Price (July 10): ₹941 per share
• Previous Close (July 9): ₹946 per share
• Current Trading Price: ₹935.50 per share

Despite this short-term fall, LIC has:

• Gained over 12% in the past six months
• Dropped nearly 11% in the past year

Main News

The Centre has approved an OFS for LIC, as part of its broader disinvestment agenda for FY25. The move aims to increase public shareholding in India's largest life insurer gradually.

According to reports:

• The government currently owns a 96.5% stake in LIC
• Public shareholders hold the remaining 3.5%
• LIC's market capitalization is close to ₹6 lakh crores
• 1% stake sale could potentially raise around ₹6,000 Crore

This planned OFS aligns with the government's objective of unlocking value from public sector enterprises while adhering to SEBI's public float norms.

Company Details

LIC, a state-run insurance behemoth, made its stock market debut in 2022 with much anticipation. It is one of the largest institutional investors in India, playing a crucial role in the domestic capital markets.

Key ownership structure:

• Government holding: 96.5%
• Public float: 3.5%

Earlier, SEBI had directed LIC to raise public shareholding to 10% by 2027, creating scope for further share sales in phases.

The government is expected to divest a 6.5% stake over the next two years in multiple tranches to meet these regulatory obligations.

Summary of the Article

The LIC share price dropped over 1% to ₹935.50 on July 10 after news broke of the Centre's approval for an Offer for Sale. This move is a part of the government's broader disinvestment strategy aimed at boosting public shareholding and generating revenue.

Key Highlights:

• LIC stock fell post OFS approval
• ₹6,000 Crore expected from 1% stake sale
• Disinvestment aligns with SEBI's public shareholding mandate
• LIC's long-term performance shows mixed trends with a 12% gain in 6 months but an 11% fall YoY