The Indian government is actively considering a further reduction of its stake in the Life Insurance Corporation of India (LIC) through a follow-on public offering (FPO) in the upcoming financial year. This strategic move is part of the government's broader effort to comply with minimum public shareholding requirements, as reported by PTI.
Gradual Process Linked to Market Conditions
Financial Services Secretary M Nagaraju has emphasized that the stake dilution process will be implemented gradually and will be closely tied to prevailing market conditions. The Department of Investment and Public Asset Management (DIPAM) has been specifically tasked with evaluating and formulating a comprehensive roadmap for this significant divestment initiative.
Government's Current Stake and Previous Offering
Currently, the government maintains a substantial 96.5 percent stake in LIC. The initial public offering (IPO) conducted in May 2022 resulted in the sale of a 3.5 percent stake, with shares priced between Rs 902 and Rs 949 per share. This landmark offering successfully raised approximately Rs 21,000 crore for the government.
Compliance Requirements and Future Plans
To meet the mandated 10 percent public shareholding requirement by May 2027, the Centre needs to divest an additional 6.5 percent stake in the state-owned insurance giant. The final details regarding the exact quantum of stake sale, pricing strategy, and precise timing will be determined at a later stage, following thorough evaluation and market assessment.
LIC's Market Performance and Financial Health
LIC currently commands an impressive market capitalization of about Rs 5.08 lakh crore. On Monday, the company's shares settled at around Rs 804 on the Bombay Stock Exchange (BSE), reflecting ongoing investor interest in the insurance behemoth.
Strong Financial Results
On the financial front, LIC has demonstrated robust performance with a significant 32 percent year-on-year increase in net profit. For the three months ending September 2025, the insurer reported a net profit of Rs 10,053 crore, compared to Rs 7,621 crore during the same period in the previous fiscal year. This substantial profit growth has been primarily attributed to reduced commission outgo, indicating improved operational efficiency.
Revenue Growth and Income Expansion
Total income for LIC showed healthy growth, rising to Rs 2,39,614 crore in the September 2025 quarter from Rs 2,29,620 crore in the corresponding period of the previous year. These financial disclosures underscore the company's strong position in the insurance sector and its ability to generate substantial revenue streams.
The government's planned stake dilution through a follow-on public offering represents a significant development in India's financial landscape, potentially offering retail and institutional investors another opportunity to participate in the country's largest life insurer. The careful, market-linked approach suggested by officials indicates a strategic focus on maximizing value while ensuring smooth implementation of this important divestment initiative.
