LIC shares gain 6% in two sessions. Should you buy ahead of the 1:1 bonus issue?

Last week, the state-owned company announced a 1:1 bonus issue along with its Q4 results. Under the bonus issue, the insurer will allot one fully paid-up equity share of Rs 10 each for every existing fully paid-up equity share of Rs 10 each held by shareholders. The company has fixed May 29 as the record date to determine shareholder eligibility for the bonus issue.

LIC reported a consolidated net profit of Rs 23,467 crore for the fourth quarter of FY26, up 23% year-on-year (YoY) from Rs 19,039 crore posted in the corresponding quarter last year. Net premium income for the quarter rose 12% to Rs 1.65 lakh crore, compared with Rs 1.48 lakh crore in the year-ago period.

For the full financial year ended March 31, 2026, the insurer reported over 5% growth in assets under management to Rs 57.29 lakh crore, while net profit increased more than 19% YoY to Rs 57,419 crore.

It also announced a 1:1 bonus. Under the bonus issue, the insurer will allot one fully paid-up equity share of Rs 10 each for every existing fully paid-up equity share of Rs 10 each held by shareholders. The company has fixed May 29 as the record date to determine shareholder eligibility for the bonus issue.

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LIC shares: Buy, sell or hold?

Citigroup maintained a ‘Buy’ rating on LIC with a target price of Rs 1,475 per share, an upside potential of more than 81% from the stock’s previous closing price of Rs 813 on the BSE. According to Citi, the improvement in numbers was driven by a better non-par product mix and favourable yield curve benefits in the fast-growing non-par business. The brokerage also noted that management highlighted initiatives to improve persistency, boost product innovation, enhance agent productivity, expand the agent network, and increase contributions from non-agency distribution channels.
Citi added that LIC’s valuation remains attractive, with projected FY27 core embedded value, excluding mark-to-market embedded value, exceeding the company’s current market capitalisation. However, it said uncertainty around the promoter-holding structure continues to weigh on the stock.Bernstein retained a ‘Market Perform’ rating with a target price of Rs 900 per share, implying an upside potential of over 11%. The brokerage said LIC reported healthy revenue growth during the quarter, with new sales rising 22% in Q4 and 18% year-on-year in FY26, led by strong growth in non-par products. Bernstein added that margins continued to improve through FY26 due to a favourable shift in product mix and supportive yield curve movements.
The brokerage also said LIC’s management expects margins to gradually converge with private-sector peers over the medium term, although the transition is likely to take time.

JM Financial maintained its ‘Buy’ rating on LIC and raised its target price to Rs 960 per share, implying an upside of 18%. The brokerage said it had upgraded the stock after Q1FY26, expecting a rerating in the second half of the year.

According to JM Financial, LIC’s diversifying product mix and improving margins strengthen growth resilience. It noted that the stock remained range-bound as weak equity markets kept embedded value below September 2024 levels.

However, the brokerage expects embedded value growth to improve as macroeconomic conditions stabilise, supported by improving business growth, an unwind of over 9%, and VNB at 2% of opening embedded value. JM Financial also upgraded its earnings estimates for the insurer.

The stock has gained 2% over the past month but is down 7% over the last six months. The company’s market capitalisation currently stands at Rs 5.27 lakh crore.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)