Shares of Life Insurance Corporation of India witnessed a sharp 50 percent fall on Friday after the stock turned ex-bonus for its first-ever 1:1 bonus share issue, triggering confusion among several retail investors. However, market experts clarified that the sudden plunge was only a technical price adjustment and not an actual erosion of investor wealth.
Under the 1:1 bonus issue, shareholders will receive one additional share for every existing LIC share they hold. As a result, the stock price adjusted downward proportionately after the ex-bonus date, making it appear as though the share had crashed by half. Analysts explained that while the share price declined sharply, the total value of investors’ holdings remains nearly unchanged because the number of shares owned has doubled.
The bonus issue marks a significant milestone for LIC since its stock market listing in 2022. The company had announced the move earlier this year to improve stock liquidity, widen retail participation, and make the shares more affordable for smaller investors. The bonus shares are being issued by capitalising reserves worth around ₹6,325 crore.
Market participants said such adjustments are common during bonus issues and should not be mistaken for a fundamental weakness in the company. Despite the temporary volatility, investors continue to monitor LIC’s long-term growth prospects, embedded value expansion, and government stake-sale plans in the insurer.
