LIC Shares Drop After Report On Likely Government Stake Sale

Life Insurance Corporation of India (LIC) shares traded lower on May 27 after reports suggested the Centre is preparing to sell a part of its holding in the state-run insurer through a secondary stake sale.

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The stock fell around 3% during the session and was trading at ₹831 apiece at around 12 pm. According to a Bloomberg report citing people familiar with the matter, the government is considering the sale of nearly 2% stake in LIC in late June or early July.

The proposed transaction could help the government raise as much as ₹10,000 crore. The report added that the Department of Investment and Public Asset Management (DIPAM) is working with Goldman Sachs Group Inc., Motilal Oswal Investment Advisors Ltd., BNP Paribas SA and IIFL Capital Services Ltd. for the planned deal.

The report stated that discussions are still underway and the final structure, size and timing of the transaction may change.

Government Holding Remains Above 96%

The government currently holds 96.5% stake in LIC, according to exchange data for the quarter ended March 2026.

LIC was listed on Indian stock exchanges in May 2022 through the country’s largest initial public offering at the time. The government had sold a 3.5% stake in the insurer through the IPO and raised nearly ₹21,000 crore. The issue price was fixed at ₹949 per share.

Under Securities and Exchange Board of India regulations, listed companies are required to maintain a minimum public shareholding of 25%. LIC has been given time until May 2032 to comply with the requirement.

The proposed stake dilution is expected to gradually reduce the government’s shareholding while improving public float in the stock.

March Quarter Earnings Support Business Growth

The development comes shortly after LIC reported a strong performance for the March quarter.

The insurer posted a net profit of ₹23,420 crore for the quarter ended March 31, compared with ₹19,013 crore in the corresponding period last year. Net premium income rose 11.5% year-on-year to ₹1.65 lakh crore.

One-time premium collections increased 21.5%, while first-year premium income from new policies rose nearly 17%.

According to Reuters calculations, annualised premium equivalent (APE), a key indicator of new business growth, climbed close to 22% to ₹22,954 crore during the quarter.

LIC’s group business APE rose 37%, while value of new business increased 67% to ₹5,891 crore. The value of new business margin improved to 21.2% from 17.6% a year ago, supported by higher contribution from non-participating products.

The insurer’s solvency ratio stood at 2.35 at the end of March, compared with 2.11 in the year-ago period, indicating an improvement in its capital position and financial buffer.