Shares of Life Insurance Corporation of India (LIC) are in focus after the government's offer for sale (OFS), with Motilal Oswal Financial Services estimating the transaction could unlock nearly $800 million of passive inflows through domestic and global index inclusions.
The brokerage expects the OFS to increase LIC's free float sufficiently to improve its eligibility across multiple benchmark indices.
According to Motilal Oswal, LIC could receive around $18 million from Nifty index rebalancing immediately after the share sale. The brokerage also sees the insurer emerging as a strong candidate for inclusion in the Nifty Next 50 and Nifty 100 during the March 2027 review, a move that could attract more than $100 million in passive flows.
Index Inclusion Likely?
Motilal Oswal believes LIC is likely to qualify for MSCI inclusion if the greenshoe option is exercised. MSCI's methodology allows stocks following public offerings or corporate actions to qualify even with free float below 15%, provided their market capitalisation and free-float market capitalisation exceed 1.8 times the standard cut-off.
If that criterion is met, LIC could enter the index as early as 10 working days after the OFS concludes, bringing estimated inflows of $450 million to $500 million.
The brokerage also expects LIC to be added to the FTSE indices after the transaction, which could result in another $200 million of passive buying.
LIC Share Price Movement
Shares of LIC closed 8.68% lower at Rs 391.30 on August 4. It has fallen 51% over the past three months, 53.4% in six months, and 56.1% over the last year.
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