Hyundai India, which launched India’s largest initial public offering (IPO) on October 15, struggled to gain retail investors’ interest on the third and last day of bidding. The quota booked for retain investors has been subscribed just 0.46 times.
The qualified institutional investors (QIIs) led the subscription with bids over 6.61 times, followed by employees at 1.65 times. The non-institutional investors (NIIs) quota was subscribed just 0.48 times out of the total reserved portion. The retail and non-institutional investors account for 50 per cent of the total IPO.
“Hyundai’s issue is not priced attractively for retail investors and high net worth individuals (HNIs). They were unlikely to see any listing-day gains or major earnings growth for the next five quarters until the company’s new capacity goes online,” said Arun Kejriwal, founder of Kejriwal Research and Investment Services, reported Reuters.
Advertisement
The Chennai-based Hyundai Motor India's IPO is the automaker’s first listing outside its home market of South Korea. The company is planning to raise Rs 27,856 crore, making it the second-largest IPO globally this year. The IPO is entirely an offer-for-sale (OFS) of 14,21,94,000 shares.
The price band of Hyundai Motor’s share is fixed around Rs 1,865-1,960. Kotak Mahindra Capital, Citigroup Global, HSBC Securities, JP Morgan and Morgan Stanley are the book-running lead managers for the issue, while KFin Technologies is the registrar to the IPO.
Most market analysts have recommended investors to subscribe to the IPO for the long-term pointing to the carmaker’s long presence in Indian automobile industry.
Advertisement
“We assign a subscribe rating to Hyundai, given steady growth prospects amid industry tailwinds, robust financials, and a healthy SUV product slate. We expect limited listing gains from this IPO, but anticipate the company will deliver healthy double-digit portfolio returns over the medium to long term,” said ICICI Direct.
Additionally, the experts highlighted that company is well positioned to attract growth opportunities in the Indian automobile sector, especially as it is planning to expand in the electric vehicle segment.
“At the upper band, the company is valued at 26.2 times its FY24 earnings and 26.7 times if we annualize FY25 earnings. We believe the issue is fully priced and recommend a Subscribe-Long Term rating for the IPO,” said Anand Rathi.
Hyundai Motor India was incorporated in 1996 and has gained a stronghold in the Indian automobile industry. The company operates a fully functional plant in Chennai with a capacity of 824,000 units and is currently establishing another plant in Talegaon, Maharashtra. The new facility is likely to increase the total capacity to 1,074,000 units over the next three to four years.
Just one email a week