Why LIC shares are down 50% today
What's the story
Life Insurance Corporation of India (LIC) witnessed a massive drop in its share price, falling by nearly 50% in early trade on Friday. The decline was primarily due to the company's stock turning ex-bonus for its 1:1 bonus share issue. The adjustment is a standard practice in the market and doesn't indicate any loss of shareholder value.
Market reaction
Bonus issue was announced in April
In early morning trade, LIC shares were priced at ₹416.10, a 49.87% decrease from the previous close. The sharp fall is merely an adjustment for the 1:1 bonus issue announced by LIC in April. Under this scheme, shareholders get one additional equity share for each share they hold. This effectively doubles the company's paid-up equity share capital and leads to a downward adjustment in stock price on the ex-bonus date.
Shareholder benefits
Bonus share issuance details
LIC's board approved the 1:1 bonus share issuance, with May 29 set as the record date for determining eligible shareholders. Investors who held LIC shares on this date were entitled to one bonus share for every share owned. The move has drawn significant investor attention in recent sessions, with the stock rallying ahead of the ex-date amid expectations of improved liquidity and broader retail participation due to an increase in outstanding shares.