LIC shares: Why state-run insurer tanked 8% today? OFS for non-retail investors kick off

Shares of Life Insurance Corporation of India (LIC) fell 8 per cent in Tuesday’s trade as the government’s two-day offer for sale (OFS) opened for subscription for non-retail investors. The stock dropped 7.92 per cent to a low of Rs 390.70 on the BSE, taking its year-to-date decline to 11.44 per cent.

The President of India, acting through the Department of Financial Services under the Ministry of Finance, has proposed to sell up to a 6.5 per cent stake in the state-run insurer at a floor price of Rs 382 per share. The floor price was about 10 per cent lower than LIC’s Monday closing price of Rs 424.35 on the BSE.

There are 21 'Buy' calls, three 'Hold' recommendations and one 'Sell' rating on LIC stock. The consensus target price, based on 25 analyst ratings, stands at Rs 547, implying a potential upside of 39.6 per cent from the current market price. The latest target came from Haitong International at Rs 670. Among other brokerages, Investec has a target of Rs 450, Antique Stock Broking sees the stock at Rs 520, while Jefferies has a target of Rs 480.

The base issue comprises 31,62,49,885 LIC shares with a face value of Rs 10 each, representing 2.50 per cent of LIC’s total issued and paid-up equity share capital. In the event of oversubscription, the promoter intends to sell up to another 50,59,99,816 equity shares, representing an additional 4 per cent stake. The total proposed sale therefore comes to 82,22,49,701 shares.

LIC said retail investors and company employees will be offered a discount of Rs 10 per share on the cut-off price on T Day, August 4, 2026. Retail investors have been defined as individuals placing bids for offer shares with a total value of not more than Rs 2,00,000. At least 10 per cent of the offer shares has been reserved for allocation to retail investors.A minimum of 25 per cent of the offer shares has been reserved for mutual funds and insurance companies. An additional 50,00,000 shares, equivalent to 0.04 per cent of the total issued and paid-up equity, will be offered to employees through the stock exchange mechanism.

Only non-retail investors are allowed to place bids on T Day, August 4, 2026. While placing their bids, they may indicate their willingness to carry forward their unallotted bids to T+1 Day for allocation in the unsubscribed portion of the retail category. For retail investors, employees, and non-retail investors who choose to carry forward their unallotted bids to T+1 Day, the date has been set as August 5, 2026.

Non-retail investors who place bids on T Day and choose to carry forward their unallotted bids to T+1 Day will also be allowed to revise their bids on T+1 Day, in line with the OFS Guidelines. The offer will be conducted during trading hours on a separate stock exchange window, opening at 9.15 am and closing at 3.30 pm Indian Standard Time on the same day.

Retail investors may bid at any price above the floor price and or at a cut-off price. LIC said the cut-off price is the lowest price at which all the offer shares are sold, based on valid bids received in the retail category and bids received from non-retail investors.

IIFL Capital Services, Goldman Sachs (India) Securities, BNP Paribas Securities India and Motilal Oswal Investment Advisors are acting as brokers on behalf of the sellers. LIC told the stock exchanges that IIFL Capital Services will act as the settlement broker.

The LIC share sale opened with the stock under pressure as the government moved ahead with the proposed 6.5 per cent OFS, with reservations and discounts laid out for retail investors, employees, mutual funds and insurance companies over the two-day process.