The share price of Life Insurance Corporation of India (LIC) surged over 5 percent in the morning session on December 22. This surge followed the government’s grant of a one-time exemption to the insurer. This allows it to achieve a 25 percent minimum public shareholding (MPS) within 10 years.
A BSE filing stated, “The Department of Economic Affairs, Ministry of Finance, via Office Memorandum dated December 20, 2023, has decided in the public interest to grant Life Insurance Corporation of India a one-time exemption to achieve 25 percent Minimum Public Shareholding (MPS) within 10 years from the date of listing, i.e., till May 2032 under Rule 19A (6) of the Securities Contract (Regulations) Rules (SCRR) 1957.”
The previous deadline to meet MPS was May 2027, requiring government share sales. This exemption eliminates the pressure on the stock, with the government currently holding 96.5 percent stake in LIC.
LIC reported a 50 percent year-on-year decrease in net profit to Rs 7,925 crore for the quarter ending September 2023. A decline in profit was connected to both a decrease in premium income and a reduction in the transfer to its shareholders’ fund.
Although the stock hit a 52-week high, it remains below its IPO price. The stock debuted in May 2022 as the country’s largest IPO, raising over Rs 21,000 crore. The LIC stock is currently trading 18 percent lower than its IPO price of Rs 949. As of 11:15 AM, the stock was trading at Rs 800, marking a 4.64 percent increase of Rs 35.50.
Disclaimer: The information provided in this blog post is for informational purposes only and should not be construed as investment or trading advice. The author is not a financial advisor and does not have any professional qualifications in this area. The author does not guarantee the accuracy or completeness of the information provided. Any action you take based on the information in this blog post is done at your own risk. Please consult with a financial advisor before making any investment decisions.
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