Shares of Life Insurance Corporation of India (LIC) experienced a significant drop of over 4% in Wednesday's trading, hitting a low of Rs 819.05 apiece on the BSE. This decline was triggered by reports indicating that the Indian government, which currently holds a 96.50% stake in the country's largest life insurer, intends to sell a 2% stake to institutional investors.
Government Eyes Rs 10,000 Crore from Stake Sale
According to sources familiar with the matter, the government is planning to offload approximately 2% of its holding in LIC, a move estimated to raise around Rs 10,000 crore. A formal marketing process for this offer-for-sale (OFS) is reportedly scheduled for June, with the stake sale expected to conclude by the end of June or early July.
This potential divestment is part of the government's broader strategy to help state-owned entities comply with the Securities and Exchange Board of India (SEBI) norms, which mandate listed companies to maintain a minimum of 25% public shareholding. The Dalal Street has recently seen similar OFS issues, including those for Coal India and Central Bank of India.
Analyst Perspectives on LIC Stock
Market analysts have offered varied perspectives on LIC's outlook amidst these developments:
- ICICI Securities commented that the current deeply discounted valuation of LIC shares is unwarranted. They noted that higher volumes present near-term tailwinds, though longer-term risks could include adverse regulatory changes.
- Emkay Global reiterated a 'BUY' rating on LIC, increasing their March 2027 estimated target price by 10% to Rs 1,100 from Rs 1,000. They cited an increase in Adjusted Premium Equivalent (APE) estimates by 4-5% and Value of New Business (VNB) margin estimates by 200-240 basis points, projecting a 15-16% increase in VNB over FY27-28E.
The proposed stake sale is a significant development for LIC and its investors, as the market assesses its implications for the insurer's valuation and future performance.