Hyundai Motor India’s initial public offering (IPO) witnessed a muted response from investors during the first two days of the bidding process. However, on third day, qualified institutional buyers (QIBs) helped the issue sail through.
The IPO was open for subscription from October 15 to October 17. It recorded an overall subscription reaching 237 per cent by the close of the final day.
India’s biggest-ever IPO was subscribed just 18 per cent on Day 1, and ended the second day with a total subscription of 42 per cent.
The issue recorded the lowest retail subscription among recent major IPOs, with only 50 per cent retail participation.
Advertisement
The IPO is scheduled to finalise share allotment basis on Friday, October 18. Bidders will receive the messages, alerts or email for debit of their funds or revocations of their IPO mandate either over the weekend or latest by Monday, October.
The automobile major had offered its shares in the fixed price band of Rs 1,865-1,960 per share with a lot size of seven shares. The company raised around Rs 27,856 crore through its primary offering was entirely an offer-for-sale (OFS) of 142,194,700 shares by its South Korean-parent Hyundai Motor Company.
Advertisement
Hyundai Motor IPO GMP
Grey market premium of South Korean automaker’s Indian arm continues to decline. The company’s shares are commanding a discount of Rs 30 against the upper end of the IPO price of Rs 1,960, reflecting a GMP of -2 per cent, in the unlisted market. Today’s GMP is significantly lower than the Rs 147 recorded on October 9, when Hyundai Motor announced its price band.
Hyundai Motor IPO Listing Date
Shares of Hyundai Motor India are expected to list on the BSE and National Stock Exchange (NSE) on Tuesday, October 22, 2024. If the current trend in the grey market continues, Hyundai Motor India shares may post a weak listing around Rs 1,930, a discount of Rs 2 per cent or Rs 30 from the upper price band of the issue price.
Hyundai Motor India is the part of South Korea’s Hyundai Motor Group, world’s third-largest auto original equipment manufacturer (OEM) based on passenger vehicle sales in CY2023. It has been the second-largest auto OEM in the Indian passenger vehicles market since Fiscal 2009, in terms of domestic sales volumes, according to the CRISIL Report.
Brokerages mostly have a positive view on the IPO recommending investors to subscribe to it for a long term citing rising demand for loans, strong market presence, technological advancement, diversified sources of the business. However, negative cash flows, cost of funds, and reliance on selected group of clients are the key concerns for the company.
Advertisement
Elara Capital has given a “Subscribe” rating to Hyundai Motor India IPO citing higher share of SUV than peers like MSIL; capability across powertrain and transmission; capacity expansion when industry growth is likely to revive in FY26; healthy margin & return ratios and good mix of higher margin exports.
However, the brokerage raised concerns over weak industry growth in medium term, falling market share as the company has lost a 230bp retail market share during FY22-25 YTD to 14.1 per cent as per Vahan and no major volumetric model launch in the next 6-12 months.
Advertisement
Saji John, senior research analyst at Geojit Financial Services says Hyundai’s IPO being the first major auto IPO in India in over two decades could attract significant global investor interest. This influx of foreign investment could further enhance the sector’s valuation.
“The company’s portfolio expansion and manufacturing capabilities highlight the growth potential and investment in the automotive market. The increased competition and innovation driven by Hyundai’s enhanced financial strength post-IPO could push other automakers to reassess their growth potential and market positioning, positively re-rating the sector. Conversely if the listing has been perceived as overvalued then it can negatively impact," he added.
Advertisement
Geojit Financial Services has given a “Subscribe” rating to the issue.
Just one email a week