The government is considering a fresh stake sale in Life Insurance Corporation of India (LIC) that could raise as much as Rs 10,000 crore, as New Delhi looks to deepen public shareholding in the country’s largest insurer amid improving profitability and a stronger product mix, people aware of the matter said.
The Centre plans to sell up to a 2% stake in the state-run insurer through an offer-for-sale route, likely in late June or early July, primarily to institutional investors, officials familiar with the discussions told ET.
“The government may dilute up to 2% stake depending on market conditions. No timeline has been fixed,” said one official aware of the developments. Another person said the transaction could also spill over to the second quarter of FY27 if equity market conditions turn volatile. The government needs to offload 6.5% stake in LIC to meet the mandated 10% public shareholding requirement by May 16, 2027.
The proposed sale would mark the government’s first follow-on divestment in LIC since its landmark initial public offering in 2022, when the Centre sold 3.5% stake and raised about Rs 21,000 crore in India’s biggest-ever IPO. The shares were priced at Rs 949 a share.
The government has budgeted Rs 80,000 crore from asset monetisation in this fiscal. With IDBI stake sale falling through, LIC stake sale may help raise some proceeds towards the target. Finance minister Nirmala Sitharaman has said that the government will pursue IDBI stake sale.
Officials said the timing and final size of the stake sale would depend on the market sentiment and investor appetite.
The move comes at a time when LIC has reported strong earnings growth and significant improvement in margins driven by a sharper focus on high-margin non-participating products since listing. Non-par products, where policyholders do not participate in the insurer’s surplus profits, now contribute over 35% of LIC’s individual business portfolio.
This move has helped the insurer narrow the profitability gap with private peers. LIC’s value of new business (VNB) margin expanded 360 basis points year-on-year to 21.2% in FY26.
The insurer also reported a 19.25% rise in profit after tax at Rs 57,419 crore for the year ended March 2026, compared with Rs 48,151 crore a year earlier.
Despite the operational improvement, LIC’s stock performance has remained volatile. After debuting below issue price in May 2022 and remaining under pressure for nearly two years, the stock recovered sharply in early 2024, crossing its IPO price and touching a high of around Rs 1,185. It then fell to Rs 722 in March this year. Since then, the share price has corrected. The shares fell 2.95% to Rs 829.90 on the BSE on Wednesday when the benchmark index fell 0.48%.
