LIC Stock Surges on Landmark 1:1 Bonus Announcement

Shares of Life Insurance Corporation of India (LIC) climbed by 5 percent to ₹844.85 on Wednesday, driven by robust trading volumes. This surge followed the company's announcement that its board has approved a bonus issue of equity shares in a 1:1 ratio. This marks a significant milestone as it is LIC's first bonus issuance since its listing on May 17, 2022.

The 1:1 bonus issue means shareholders will receive one fully paid-up equity share for every share they hold. LIC stated that this move is intended to reward shareholders for their trust and to balance the company's paid-up capital with its reserves. Additionally, it is expected to improve share liquidity and marketability, making the stock more accessible to a wider investor base.

This bonus issuance will effectively double LIC's paid-up equity capital to approximately ₹12,650 crore from its current ₹6,325 crore. The total number of outstanding shares will also increase to about 12,650 million. The company plans to capitalize reserves amounting to around ₹6,325 crore from its substantial surplus, pending shareholder approval, with allotment anticipated within two months.

LIC's CEO & MD, R Doraiswamy, highlighted the company's consistent dividend payments and increases since its listing as a reason for this step. Analysts note that LIC's stock has been consolidating and is currently trading within a triangle pattern. There is potential for a pullback rally towards the 200-day moving average, around the ₹870 level.