LIC Shares Soar 5% as Government Grants One-Time Exemption on Minimum Public Shareholding

22 Dec 2023 , 02:58 PM

LIC shares surged over 5 % on December 22, hitting a 52-week high, following the government’s one-time exemption allowing the insurer to achieve a 25 % minimum public shareholding (MPS) within 10 years.

The exemption removes concerns about the earlier May 2027 deadline set by Sebi regulations for LIC to achieve MPS, which would have necessitated share sales by the government. Currently, the government holds 96.5 % of LIC.

At the time of writing, LIC shares were trading at Rs 795.30 on the NSE, reaching a 52-week high of Rs 821 earlier in the session. Despite the recent surge, the stock is down 16 % from its IPO price of Rs 949 in 2022.

Earlier in the year, the government amended regulations for listed state-run companies, stating that they won’t need to comply with the 25 % MPS rule even after privatization if the government deems it ‘in public interest.’

DIPAM Secretary Tuhin Kanta Pandey clarified that there is no rush to bring in any Follow-On Public Offering (FPO) for LIC, expressing confidence in the institution’s strengths and its positive perception among a wider set of investors.

LIC recently introduced a new insurance product called Jeevan Utsav, a non-linked, non-participating whole-life plan offering income benefits of 10 % of the sum assured, with a minimum sum assured of Rs 5 lakh.

In the quarter ending September 2023, LIC reported a 50 % YoY decline in net profit to Rs 7,925 crore. The decline was attributed to a fall in premium income and a lower transfer amount to shareholders’ funds.

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