Life Insurance Corporation of India (LIC) share price recovered on Wednesday after opening lower, trading in the green during the session as the offer-for-sale (OFS) opened for retail investors today.
The stock rose as much as 0.18% on the NSE, bouncing back slightly after plunging more than 8% in the previous trading session.
LIC shares opened at ₹386 apiece today, as compared to previous close of ₹391.30 on Tuesday.
LIC OFS details
The government’s OFS in LIC witnessed strong demand from institutional investors, with the issue subscribed 3.32 times its base size. The robust response prompted the government to exercise the green shoe option, Department of Investment and Public Asset Management (DIPAM) Secretary Arunish Chawla said on Tuesday.
The OFS opened for non-retail investors on Tuesday, while retail investors can place their bids on Wednesday. The government is selling a 2.5% stake in LIC, with an additional 4% available under the green shoe option, taking the total potential stake sale to 6.5%.
The floor price for the OFS has been set at ₹382 per share. Given the strong institutional demand, the government decided to activate the green shoe option, which enables the seller to offer additional shares beyond the base issue in the event of high investor interest.
“Offer for Sale in LIC received an overwhelming response from the institutional investors and was over-subscribed 3.32 times of its base size. This enthusiastic participation reflects robust investor confidence and the depth of India’s capital markets. In view of the exceptional demand, the Government has decided to exercise the green shoe option,” Chawla said in a post on X.
The LIC stake sale is intended to help the government achieve the Minimum Public Shareholding (MPS) norms ahead of the stipulated deadline. Earlier, the government had stated that the transaction would increase public ownership in the insurer and support compliance with the mandated public shareholding requirement.
The green shoe option allows the government to expand the size of the offer based on investor demand. Following a strong response from institutional investors, who subscribed to the base offer 3.32 times, the government has decided to exercise this option.
The OFS is part of the government’s broader disinvestment strategy and represents its first stake sale in LIC since the insurance giant was listed in May 2022.
LIC OFS – Should you participate or not?
According to Harshal Dasani, Business Head – INVasset PMS, the LIC OFS is better viewed as a long-term capital allocation opportunity than a short-term trading event.
“At the announced floor price of ₹382 per share, the issue represents one of the largest divestment exercises undertaken this fiscal and reflects a calibrated approach to monetising public assets rather than a strategic exit,” Dasani said.
He noted that the immediate challenge is technical rather than fundamental. A transaction of this size naturally creates a near-term supply overhang, which may keep the stock range-bound until the additional shares are absorbed.
“Investors should also recognise that the proceeds accrue to the government and do not enhance LIC’s capital position or earnings capacity. The investment thesis should therefore rest on LIC’s operating fundamentals. Its ability to improve margins, grow profitable business, strengthen embedded value and deliver consistent earnings will determine long-term returns, not the OFS discount alone. The larger public float is a positive structural development as it should improve liquidity, enhance institutional participation and strengthen price discovery. For long-term investors, participation should depend on conviction in LIC’s earnings trajectory and valuation rather than the attraction of a discounted offer price,” he said.
Meanwhile, Seema Srivastava, Senior Research Analyst at SMC Global Securities, believes that the LIC Offer for Sale (OFS) appears to provide a reasonable entry opportunity for retail investors rather than a short-term trading bet, from a long-term investment perspective.
“For investors with a 3–5 year investment horizon, the discounted acquisition price, attractive valuation relative to intrinsic franchise strength, healthy dividend potential, and India’s structurally underpenetrated life insurance market make the OFS an attractive accumulation opportunity. Therefore, long-term investors can consider participating in the retail OFS, while those seeking quick listing gains or short-term momentum may find limited upside in the immediate aftermath of the offer,” Srivastava said.
Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
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