LIC shares jump 6% on getting extension to meet MPS norms

Shares of Life Insurance Corporation (LIC) of India, the country’s largest life insurer, surged nearly 6% in intraday trade on Wednesday on getting extension to meet minimum public shareholding (MPS) norms. The market regulator Securities and Exchange Board of India (SEBI) has granted LIC an additional three years till May 2027 to achieve 10% public shareholding norms, it says in an exchange filing today.

Early today, LIC shares opened marginally higher at ₹934 against the previous closing price of ₹931.05 on the BSE. The stock got a boost after the company informed exchanges about extension on MPS norms and rallied as much as 5.5% to ₹983, while the market capitalisation rose to ₹6.16 lakh crore. The counter witnessed strong volume, with 3.6 lakh shares changing hands over the counter compared to two-week average of 1.56 lakh stocks.

At the current level, LIC shares trade 16% lower than its 52-week high of ₹1,175 touched on February 9, 2024, while it has risen nearly 75% against its 52-week low of ₹562.2 hit on May 19, 2023.

The share price of LIC of India, which debuted on May 17, 2022, has risen 71% in the last one year; 60% in six months; and 1% in the past one month. The PSU stock currently trades marginally lower than its IPO price of ₹949 per share.  

In an exchange filing today, LIC of India says, “SEBI vide its letter dated May 14, 2024 has conveyed its decision, to grant additional time of 3 years to Life Insurance Corporation of India to achieve 10% public shareholding under Rule 19(2)(b)(iv) of the Securities Contracts (Regulation) Rules, 1957, i.e., within a period of 5 years from the date of listing.”

As a result, the revised timeline for the LIC to achieve 10% public shareholding is on or before May 16, 2027. As of March 31, 2024, public shareholding in LIC stood at 3.5%, while the government holding was at 96.50%. The government had offloaded 3.5% stake in LIC via IPO route in 2022 to raise around ₹21,000 crore.

In December last year, LIC had received a one-time exemption to achieve 25% public shareholding within 10 years from the date of listing, i.e. till May 2032.

As per the SEBI norm, a listed company is required to maintain a minimum of 25% public shareholding within three years of listing or one year of the merger or acquisition. In case of listed entities such as LIC, having a valuation of over ₹1 lakh crore, they are required to meet this norm within five years of listing.

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