Life Insurance Corporation of India (LIC) share price is in the spotlight today. This is because the stock appeared to crash nearly 50% during early trade on the National Stock Exchange (NSE).
The stock, which had closed around Rs 830 earlier, slipped to nearly Rs 413 during intraday trade, triggering confusion among many retail investors. However, the sharp decline does not represent an actual destruction of shareholder wealth.
The fall is purely technical.
The state-run insurance giant has turned ex-bonus for its first-ever 1:1 bonus share issue, leading to a proportional adjustment in the stock price.
What exactly happened to LIC shares?
A 1:1 bonus issue means shareholders receive one additional share for every one share already held.
Breaking it down, if an investor owned 10 shares before the bonus issue, the holding will now become 20 shares after the bonus shares are credited.
Since the number of outstanding shares doubles, the stock price adjusts downward proportionately on the ex-bonus date.
That is exactly what happened with LIC shares today.
So while the stock price appeared to halve on trading screens, the overall value of an investor’s holding remained largely unchanged.
For instance, an investor holding one LIC share worth around Rs 830 earlier would now hold two shares priced near Rs 415 each.
The total value still remains roughly the same.
Is LIC actually down 50% today?
Not really.
After adjusting for the bonus issue, LIC shares were actually trading almost flat in the intraday trade.
The apparent 50% fall simply indicates the adjustment linked to the bonus shares.
Many investors often misunderstand ex-bonus adjustments because the stock price suddenly appears much lower on trading platforms. But technically, the market is only recalibrating the stock price to account for the increased number of shares in circulation.
Why did investors rush into LIC before the record date?
LIC’s first-ever bonus issue had generated strong investor interest over the past few weeks.
The company had fixed May 29 as the record date to determine eligible shareholders for the bonus shares.
Since Indian markets follow a T+1 settlement cycle, investors needed to purchase LIC shares before the ex-bonus date to qualify for the additional shares.
With Thursday being a market holiday, Wednesday, May 27, became the last effective day for investors to buy the stock and remain eligible for the bonus entitlement.
Anyone purchasing the shares on Friday will not receive the bonus shares.
LIC Q4FY26 recap
LIC’s bonus issue also comes shortly after the insurer reported strong quarterly earnings.
The company posted nearly 23% year-on-year growth in net profit for the March quarter, while also announcing a final dividend of Rs 10 per share.