Life Insurance Corporation of India (LIC) shares turned ex-bonus on May 29, 2024, as the insurer implemented its first 1:1 bonus share issue [1], [2].
This corporate action is significant because it doubles the number of shares held by investors without requiring additional payment. While the share price typically adjusts downward to reflect the increased supply, the total value of an investor's holding remains theoretically the same.
The bonus issue provides shareholders with one additional share for every single share they hold [1]. This move is backed by capital totaling Rs 6,325 crore [5].
Market reactions to the ex-bonus date varied across reporting outlets. Some data indicated that shares showed a drop of nearly 50 percent after turning ex-bonus [3]. This decline is a standard mechanical adjustment in stock pricing when a 1:1 bonus is issued, as the company's value is spread across twice as many shares [6].
Other reports highlighted different trends following the initial announcement. One report said the stock traded up 3.58 percent to Rs 832.40 [4]. This discrepancy reflects the difference between the immediate price adjustment on the ex-date and the market's general sentiment toward the announcement.
LIC is listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) in India [7]. The record date for the allotment of these additional shares was May 29, 2024 [2].
“LIC implemented its first 1:1 bonus share issue.”
A bonus issue is often used by companies to make shares more affordable to retail investors by lowering the price per share while increasing liquidity. For LIC, this first-ever bonus issue signals a strategy to reward long-term shareholders using accumulated reserves without depleting cash through dividends.
