Why Did the Government Defer LIC’s OFS to the Next Financial Year?

Synopsis:- A PSU stock remained in focus after the government deferred a planned OFS to the next financial year. Shares rose 1.1%, with market capitalisation at ₹5.18 lakh crore. The Centre holds 96.5% stake, while SEBI has set a May 2027 deadline to raise public shareholding to 10%.

The shares of the largest government-owned insurance company are in focus after the government postponed the offer for sale for the next financial year as it seeks stronger investor demand.

With a market capitalisation of Rs 5,18,207.06 crore, the shares of Life Insurance Corporation of India closed at Rs 818.85 per share, increased around 1.14 percent as compared to the previous closing price of Rs 809.60 apiece.

OFS Postponed

Earlier, the government first announced plans for an Offer for Sale (OFS) in Life Insurance Corporation of India (LIC) as early as August 2025, with reports indicating preparations for a 2.5-3% stake divestment. Subsequent updates in September 2025 mentioned potential 3-5% stake sales via OFS within the financial year. By November 2025, sources pointed to a likely January 2026 timeline, following roadshows.

However, according to the information available, the government has postponed the LIC OFS, with the stake sale now likely only in the next financial year as it seeks stronger investor demand. The plan to sell stake, originally targeted for January 2026, may be taken up after the IDBI Bank divestment. SEBI has allowed time till May 2027 to raise public shareholding to 10%.

Additionally, the Offer for Sale route enables the government to reduce its stake in public sector companies via the stock market. These deals attract close attention from investors, as they offer both retail and institutional participants a chance to buy shares in government-owned firms.

As of December 2025, the Government of India, under the name of the President, owns a 96.50 percent stake in the company, while Retail shareholders own a 2.03 percent stake in the company, Foreign Institutional Investors own a 0.13 percent and Domestic Institutional Investors own a 1.35 percent.

The company delivered steady improvement in Q2FY26, with revenue rising 4% to Rs 2,41,524 crore from Rs 2,31,132 crore in Q2FY25. Profitability strengthened more sharply, as net profit jumped 31% to Rs 10,096 crore, reflecting better operational efficiency and margin expansion during the period.

Life Insurance Corporation of India showed improvement in operating performance over the past year. Operating profit rose from  Rs 6,588 crore in Sep-24 to  Rs 9,492 crore in Sep-25, after peaking at  Rs 21,514 crore in Mar-25. OPM expanded from 3% to 4% YoY, indicating modest margin improvement despite quarterly volatility.

Life Insurance Corporation of India is India’s largest life insurance company and a key pillar of the country’s financial system. With a vast distribution network, strong brand trust, and a diversified product portfolio, LIC serves millions of policyholders while playing an important role in long-term savings and capital market stability.

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