LIC Turns Ex-Bonus 1:1 Shares: Why Stock Falls 50% But Investors Should Not Panic

Added: 2026-05-31

[00:00:00]LIC Stocks Saw a [Music] Sharp 50% Fall Today. But is this really a crash? Let's understand that. Shares of Life Insurance Corporation of India [music] turn X bonus today for its first ever 1:1 bonus issue. That means investors will receive one additional [music] share for every share they already hold. Because of this adjustment [music] the stock price automatically reduces to half of its price. But investor wealth remains unchanged. [Music] For example, if you held one share worth ₹800 earlier, you now hold two shares worth ₹ 400 each. So the so called 50% [music] crash is only a technical adjustment not a real fall as per the market experts.

[00:00:47]In fact, after adjusting for the bonus, LIC [Music] shares were slightly higher in trade showing no real damage to the investor [Music] value. The bonus issue was announced after strong quarterly earnings where LIC reported a 23% rise in the net profit. The company also declared [music] a dividend adding to shareholder returns. Bonus issues [music] are usually done to add liquidity and make the stock more affordable for retail investors.

[00:01:16]However many investors [music] unfamiliar with the corporate action may misinterpret the price drop as a crash. So market experts [music] advise investors not to panic and instead one can focus on the fundamentals.

[00:01:31]LIC remains one of India's strongest financial [music] institutions with stable earnings and large market presence. Government sold 3.5% stake in LIC in May [music] 2022. In what was then the country's largest initial public offering, raising about ₹21,000 crore. The shares were priced at ₹949 [music] a piece. The government owned 96.5% of LIC s [music] as of March 31 according to the exchange data. The insurer has been granted 10 years from its 2022 listing to meet [music] the Securities and Exchange Board of India's minimum 25% public [music] shareholding requirement, giving it until May 2032 to comply. Last week LIC reported a 23% rise in quarterly profit helped by strong [music] group business growth and continued momentum from last year's tax cuts. LIC net profit rose to ₹3,420 crore for the 3 months ended March 31 [music] up from ₹193 crore a year earlier.

[00:02:43]Net premium income grew by 11.5% to ₹ 1.65 lakh crore. One-time premium rose by 21.5% [music] while first-year premiums from new policies rose around 17%.