LIC IPO company plans bonus shares higher dividend to shore up confidence in stock – Business News India
There is good news for investors who are still at a loss by betting on Life Insurance Corporation of India (LIC) IPO. Actually, the company is planning to pay bonus shares or
dividends to its investors. This information has been given in a report by news agency Reuters. What's in the report: The report quoted sources as saying that LIC is now
contemplating taking steps to improve its share price. The company can announce to distribute dividend i.e. dividend or bonus shares to its investors. For this, plans are being
made to transfer about $ 22 billion from policyholders' funds to the fund earmarked for this. This could be one-sixth of the total non-participating funds. Note that in
non-participating insurance products, insurance companies are not required to share their profits in the form of dividends to policyholders. Whereas in partnership products,
insurance companies have to pay dividends to the policyholders to the insurance companies. Shareholders' confidence will increase: According to sources, transferring some of this
to the shareholders' fund is a way of boosting investor confidence. Sources said that after the completion of this process, the total assets of LIC will increase by about 18 times
from the current value of around Rs 105 billion. However, LIC and the Finance Ministry have not said anything officially yet. Read this- LIC IPO made a loss, now the government has
made a plan for better returns to the investors
What Experts Say: Harvinder Singh, partner at law firm DSK Legal, said a large shareholder fund would attract the
attention of new and existing investors. This amount will be used by LIC to pay dividend or issue bonus shares in future. Listing was done on 17th May: LIC was listed on the stock
exchanges on 17 May. Since then the company's stock has not been able to even reach the level of Rs 949 at the issue price of its IPO. On Friday, the company's stock closed at Rs
592.50. Its all time low is Rs 588. It can be said that LIC's stock has fallen by more than 35%. This has wiped out about 2.23 trillion Indian rupees in the wealth of investors.
Brokerage trusts: According to Refinitiv data, out of nine brokerages covering LIC share, seven have 'Buy' or 'Strong Buy' rating, with an average price target of Rs 840.