LIC is making headlines yet again  – From entering markets with one of the biggest initial public offers in the history of Indian primary markets to the biggest discount offer for sale. Four years ago, Life Insurance Corporation of India walked onto the stock market stage with the loudest entrance any Indian company had ever made. Its 2022 initial public offering raised over Rs 20,500 crore, priced at Rs 949 a share.

This week, LIC is in the news yet again. But this time the government is not asking investors to pay a premium. It is offering them a discount.

The government has now completed the two-day OFS, offering up to a 6.5% stake in LIC. While institutional investors participated on the first day, retail investors were allowed to bid on the second day at a discounted price.

LIC OFS: A sharp contrast with record IPO

When LIC came to the stock market in May 2022, it was one of the most closely watched IPOs. 

The issue was priced at Rs 949 per share. This helped the government raise around Rs 20,557 crore.

Now, let’s forward to August 2026. 

Recently, the government has launched an OFS with a floor price of Rs 382 per share, while retail investors were able to buy shares at Rs 373.10 after receiving a Rs 10 discount.

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Between these two events, LIC issued a 1:1 bonus share in April 2026. Even after adjusting for the bonus issue, the effective IPO acquisition cost works out to around Rs 474.50 per share. This still remains well above the current OFS price.

Government expands the size of the stake sale

The government had initially planned to sell a 2.5% stake. This translates to about 31.62 crore shares. However, after exercising the green shoe option, the total offer size increased to 6.5%, or more than 82.22 crore shares.

If fully subscribed, the stake sale is expected to fetch nearly Rs 31,400 crore, making it one of the largest disinvestment exercises undertaken by the government.

Retail investors were allocated around 8.22 crore shares, while an additional 50 lakh shares were reserved for eligible LIC employees.

How did investors respond?

Retail participation remained moderate.

According to BSE data, the retail portion received bids for around 5.71 crore shares, against nearly 8.22 crore shares reserved for the category. This translates to roughly 69% subscription in the retail segment.

The market reaction was also cautious. LIC shares declined sharply after the OFS announcement. 

The share price of LIC is down more than 7% so far in 2026. The company currently commands a market capitalisation of around Rs 2.48 lakh crore.

Why has the price come down?

There are several factors that have influenced LIC’s stock performance since its listing.

Apart from market volatility in the broader market, investors have remained cautious due to concerns such as the possible government stake sales as well as the stock’s relatively slow post-listing performance.

Should long-term investors pay attention?

According to Meena Gupta, Sr. VP, Choice Broking Firm, “The floor price of Rs 382 represents roughly a 10% discount to LIC’s pre-OFS market price, and more importantly, the government has indicated no further stake sales in LIC for the next 3-4 years. This removes the single biggest overhang that has weighed on the stock — the fear of continuous supply from further disinvestment. That said, investors should go in with the right expectations.”

“The stock fell nearly 7-9% on the day the OFS was announced, which shows the market is treating this as a fair repricing rather than a bargain — so this isn’t a bet for a quick post-listing pop. It suits investors who already believe in LIC’s long-term franchise — its distribution scale, embedded value growth, and market leadership in life insurance — and are comfortable holding for two years or more,” added Gupta. 

Disclaimer: This article is for informational purposes only and does not constitute an offer, solicitation, or recommendation to buy, sell, or hold any security or participate in any Offer for Sale (OFS). Equity investments are subject to market risks, and past stock performance, valuation adjustments, or government disinvestment pricing do not guarantee future returns. Readers are strongly advised to conduct independent research and consult a SEBI-registered financial advisor before making any investment decisions. This disclaimer has been generated using AI to support user well-being and responsible content consumption.