LIC stock wipes more than $18 billion of wealth after mega-IPO, what should investors do now?

LIC share price has been falling since its much-awaited listing on Indian bourses.

New Delhi: The initial public offering (IPO) of the Life Insurance Corporation (LIC) of India was one of the much-anticipated events for stock market investors in 2022. However, what followed next was nothing less than a nightmare for the stockholders of the insurance behemoth. So far, the LIC IPO losses stand at more than $18 billion – losing nearly a third of its valuation. 

On Friday, LIC’s share ended at Rs 661.70, down by another 3.2%. From the issue price of Rs 949, the stock is down more than 30%, leading to a massive loss of wealth for investors. 

Moreover, the shares of the state-run insurer are unlikely to cross the IPO price even a year from now, according to global brokerages' target prices. For instance, Bank of America's (BoFA) best target of Rs 930 is still 2% below the issue price of Rs 949.

On the other hand, Goldman Sachs' target price of Rs 700 is 35% below the issue price. Whereas, the target price of JP Morgan of Rs 840 is 13% lower than the issue price. The majority of target prices are projected for the end of the current fiscal year in 2023.

According to a recent report by Bank of America, LIC, however, has room for growth. The brokerage firms are of the view that LIC stock is available at a 47-70% discount in comparison to private players.