The record date for first-ever bonus issue by insurance behemoth (LIC) is slated for later this week, heightening investor interest in the PSU counter.
LIC shares have been caught in an uptrend, rising for three straight sessions, following a strong set of earnings last week and the announcement of the bonus record date for its 1:1 issue. The PSU stock rose over 2% on Tuesday, taking its three-day rise to 7%.
Last day to buy LIC shares for bonus issue
LIC has fixed 29 May as the record date to determine shareholders eligible for the corporate action. Given the Indian stock market’s T+1 settlement system, investors need to buy the stock at least one day prior to the record date.
“The Board of Directors of the Corporation (“Board”) has fixed Friday, May 29, 2026, as the Record date for the purpose of ascertaining the eligibility of Members of the Corporation for bonus equity shares in the proportion of 1:1, i.e., 1 (One) new fully paid-up equity share of Rs. 10/- (Rupees Ten only) each for every 1 (One) existing fully paid-up equity share of Rs. 10/- (Rupees Ten Only) each,” the company said in a filing.
Given the stock market holiday on Thursday, 28 May, the last day to buy LIC shares to be eligible for the is Wednesday. Buying on the record date will result in a missed opportunity.
As part of the bonus issue, over 21 lakh shareholders of LIC will get one free share for every share held by them on the record date. However, this action will not increase their investment value, only the number of shares held, as the price per share would be halved or adjusted in tandem with the bonus issue ratio.
Should you buy LIC shares for bonus benefit?
But for those who don’t hold LIC stock, the question is whether they should consider buying ahead of the record date? Analysts remain mixed.
According to Prathamesh Kadival, Research Analyst at Bonanza, Friday’s record date is less a reward for loyal shareholders and more a piece of plumbing for the eventual stake sale by the government. He believes that doubling the share count makes it materially easier for the government to execute a future offer-for-sale (OFS) without overwhelming the market with large ticket trades.
The government currently owns the majority 96.50% stake in LIC as of the March quarter, which it needs to bring down to take the public float to at least 10% by May 2027.
He finds the impending overhang as arguably the single most important medium-term variable for the stock.
Dr Ravi Singh, Chief Research Officer (Research) at Master Capital Services, also advised against buying LIC shares for the sake of the bonus benefit, as he believes the major chunk of gains on the back of the action are already realised by the market.
“The bonus issue is mainly a benefit for existing shareholders and not for new investors to buy the stock immediately. The stock has already moved up quite a bit on this news. Some consolidation or profit booking post the record date is quite possible,” he noted.
He, meanwhile, finds LIC stock a good bet from a long-term perspective. The company’s latest earnings reinforce analysts’ positive view on the counter.
“LIC’s fundamentals look solid with a solid market position, improving profitability, and valuations that look reasonable compared to private insurers. Long-term investors may still find LIC worth holding, but those buying purely on the bonus announcement should be a little careful at these levels,” he advised.
The standalone net profit for the March quarter rose 23.2% YoY to ₹23,420 crore, taking full-year FY26 profit after tax to ₹57,419 crore, a 19.25% jump. Moreover beyond headline profits, the operating metrics underline a genuine shift in business quality: Annualised premium equivalent (APE) grew about 22% YoY in Q4, with group business up 37% and individual APE up 16%; value of new business (VNB) surged 66.7% to ₹5,891 crore and VNB margin for FY26 expanded 360 bps to 21.2%, implying a Q4 margin of roughly 24.9%.
Kadival said that lost in the bonus issue chatter was the fact that LIC delivered its strongest quarterly print since listing. “At roughly 0.5 to 0.6 times embedded value, LIC trades at a steep discount to private peers such as HDFC Life and SBI Life, which command 1.8 to 2.5 times. The discount has structural reasons, slower EV compounding, government ownership and the looming OFS, but it also leaves room for a rerating if the margin story holds and the eventual stake sale is executed at a sensible price,” he said.
He said that for now, Friday’s bonus is the headline. But the quarter behind it may well prove to be the “more durable story”.
Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.