When the Life Insurance Corporation of India listed on the stock exchanges in May 2022, it was meant to be a landmark — the largest IPO in the country's history, a national institution finally opening itself to public shareholders. Instead, it became one of the most closely watched disappointments on Dalal Street.

The story of LIC's share price is not a single dramatic crash but a slow erosion of confidence: a debut that stumbled, a recovery that didn't last, and a string of investments that keep landing the insurer in the wrong headlines. Here is how the fall unfolded — and what is really dragging the stock down.

Where the fall began: a debut that went wrong

The trouble started on day one. The government priced the IPO at ₹949 per share — the top of its band — and raised about ₹20,560 crore by selling a 3.5% stake. But demand was lukewarm. The issue was subscribed just 2.95 times, with notably weak interest from institutional and foreign investors, the very buyers who provide staying power after listing.

On 17 May 2022, LIC listed below its issue price and closed its first day at ₹873, down about 8%. It was ranked the second-worst debut among the eleven companies worldwide that raised over a billion dollars in 2022. The market's verdict was immediate: the IPO had been priced richly for a giant that was growing slowly, and there weren't enough committed buyers to hold the line.

The slide to the bottom

From there the decline was steady rather than sudden. By September 2022 the stock was down roughly 27 to 32% from its issue price and had hit its lowest level since listing. The government publicly dismissed the dip as a "temporary blip."

The decisive blow came in early 2023. The Hindenburg Research report on the Adani Group in January triggered a rout across Adani stocks — and LIC held around ₹36,000 crore of them. As those holdings sank, so did confidence in LIC itself. By late February 2023 the stock had fallen to a then-record low of about ₹567.8, its market value down roughly ₹2.4 trillion — or 40% — from IPO levels, and its market-capitalisation ranking had slipped to 12th from 6th at the time of listing. The all-time low of about ₹530 came on 29 March 2023.

A recovery that didn't hold

Then, unexpectedly, LIC turned around. The stock crossed ₹1,000 for the first time in February 2024, and by mid-2024 it had rallied about 39% for the calendar year, reaching a record high near ₹1,197 in late July and an intraday peak of ₹1,221.50 on 1 August 2024. Its market capitalisation touched around ₹7.56 trillion, briefly overtaking corporate heavyweights. For a moment, the IPO disappointment looked like it was behind the company.

It wasn't. That August 2024 peak marked the start of a second, longer decline — and this time the problems were LIC's own.

The real issues: what has dragged LIC down since August 2024

Unlike the 2023 fall, which was driven by an external market shock, the slide from the August 2024 high has been about the business itself. By January 2025 the stock had dropped to a 52-week low of ₹806.85, down about 34% from its peak, and it has stayed weak since. The reasons stack up.

New business is shrinking

This is the core problem. In the December 2024 quarter, LIC's Annual Premium Equivalent — a key measure of new-policy sales — fell about 24% to ₹9,950 crore. New-business premium dropped around 21%, net premium income fell about 9%, and individual policy sales slid nearly 7%. Group single premium had collapsed roughly 41% year-on-year.

Net profit actually rose 17% to over ₹11,000 crore — but that was powered by investment gains, not by selling more insurance. Which is exactly what worried the market.

Margins are thin and getting thinner

LIC's Value of New Business margin fell to around 19.4%, from about 26% a year earlier, and by some 2026 estimates sits in the mid-teens. Private insurers run margins of 25 to 30%. The gap is structural: LIC leans heavily on low-margin traditional participating policies, while private rivals sell more high-margin protection and non-participating products. Investors simply pay less for lower-quality growth.

Market share is bleeding to private players

LIC's total premium market share has slid from roughly 66% in FY22 toward the high-50s% — a drop of about 300 basis points in a single year. Its group business fell sharply and its individual business was roughly flat, even as the wider industry grew. The losses are concentrated in exactly the high-margin segments, going to SBI Life, HDFC Life, ICICI Prudential and Max Life.

Regulation keeps changing the rules

New surrender-value norms from the insurance regulator, effective October 2024, forced insurers to pay more to customers who exit early. LIC responded by redesigning products, raising minimum ticket sizes and reworking agent commissions — all of which dented policy counts and near-term margins.

Then, from 22 September 2025, GST on individual life premiums was cut to zero. Good for affordability and long-term demand, but insurers lost their input tax credit, raising costs an estimated 3 to 5%. On top of that, LIC has been hit by recurring GST demand orders, each knocking sentiment.

Its earnings swing with the stock market

LIC sits on an enormous equity book of well over ₹14 lakh crore. Mark-to-market movements can swing its reported profit by ₹1,000 to ₹3,000 crore in a single quarter, which makes the stock hard to model and ties it directly to broad market selloffs.

And the government keeps selling

The state still owns about 96.5% of LIC, leaving a tiny free float and light institutional ownership. Under market rules, LIC must raise its public shareholding to 10% by May 2027 — which means a steady stream of shares hanging over the price.

In May 2026 the company issued bonus shares on a 1-for-1 basis, which improved liquidity but mechanically halved the headline price overnight. (A paper adjustment, not a real loss — so the roughly ₹400 level in 2026 cannot be compared directly with the ₹1,197 peak of 2024.) Then, on 4 August 2026, the government launched an offer to sell up to 6.5% of LIC at a floor price of ₹382 — a discount to the market — and the stock fell 7 to 9% on the news. In bonus-adjusted terms, that still leaves LIC trading below its original issue price.

The through-line is clear: since August 2024 the market has been repricing LIC as a slow-growing, low-margin, government-controlled insurer that is losing ground to nimbler private rivals, with regulation and repeated stake sales piling on. No single dramatic event — just a steady loss of faith.

The Rajesh Exports problem — and why it matters more than it looks

The latest chapter is Rajesh Exports, and it captures LIC's deepest credibility problem in miniature. LIC is the largest public shareholder in the Bengaluru gold refiner and jeweller, holding 10.8% — a stake it had actually increased back in 2021.

In June 2026, Rajesh Exports imploded. In a 109-page interim order, the market regulator alleged the company had inflated its revenues by about ₹15.15 lakh crore between FY21 and FY25, that nearly all of certain subsidiaries' revenue was materially misrepresented, and it barred the promoter from the markets over alleged fund diversion. The stock hit successive lower circuits — already down about 42% in 2026 before the order and roughly 70% over two years — and the exchange flagged a possible trading suspension over missed filings.

For LIC, the direct financial damage is real but small. Its Rajesh Exports holding was worth over ₹2,000 crore at its February 2023 peak, had fallen to about ₹637 crore by the start of 2026, and collapsed to roughly ₹285 to 300 crore after the regulator's order — including about ₹65 crore wiped out in just four trading days. In rupee terms, that is a rounding error against LIC's multi-lakh-crore portfolio.

The real damage is to trust. It is the second high-profile case, after Adani, of LIC being caught holding a governance-troubled stock — and it feeds the exact question that already weighs on LIC's own valuation: is LIC a careful steward of the public's savings? There is also a practical trap. A 10.8% stake in a stock that is circuit-locked, illiquid and facing suspension is effectively stuck; LIC cannot cleanly exit and may have to mark it down further.

A pattern, not an accident

Rajesh Exports is not a one-off. Because LIC is so large — it owns roughly 4 to 5% of the entire Indian stock market — it has repeatedly served as the government's buyer of last resort, and it keeps turning up on the shareholder register of India's biggest corporate blow-ups.

The Adani episode of 2023 was the same headline risk on a bigger scale, with holdings of around ₹36,000 crore and notional losses estimated near ₹50,000 crore at the worst — though those stocks later recovered. In 2019, LIC was directed to buy a 51% controlling stake in IDBI Bank when the lender was drowning in bad loans of nearly 32% and posting quarterly losses of over ₹3,600 crore, in a deal widely seen as a rescue funded by policyholders' money; the bank is now being privatised. LIC was also the largest shareholder, at about 25%, in IL&FS, whose 2018 collapse triggered India's shadow-banking crisis. Across public sector banks, LIC lost money in 18 of its 21 holdings over one two-and-a-half-year stretch, with names like Dena Bank, UCO Bank and Bank of Maharashtra falling more than 60% even as LIC kept buying them. And it remains a large, deeply underwater shareholder in the debt-laden Vodafone Idea. Even ordinary market swings hit hard: in July 2025 its portfolio reportedly fell about ₹46,000 crore, dragged down mainly by Reliance.

To be fair, the same scale has produced big winners too — its long-held stake in SBI, for instance — and the Adani holdings recovered rather than vanishing. But the overall impression is hard to shake.

The bottom line

LIC's fall is not the story of one bad day or one bad bet. It is the story of a slow repricing: an institution that came to market overpriced, that grows slowly and earns thin margins, that is losing share to sharper competitors, that is buffeted by every change in regulation, and whose majority owner keeps selling shares into the market. Layered on top is an investment portfolio that is both its greatest strength and its biggest liability — enormous, powerful, and yet forever turning up in the wrong places, from Adani to IDBI to Rajesh Exports.

That is why, years after its historic debut, India's insurance giant still trades at a discount to the private insurers it once towered over. The question the market keeps asking — is LIC a careful steward of the nation's savings, or the government's dumping ground? — is the one it has yet to convincingly answer.