Hyundai Motors' Debut Fails to Impress D-Street as Stock Falls by Nearly 4%

Hyundai Motors Share Price: The shares of the automobile company failed to impress investors as Hyundai made a muted debut on the D-street. Despite being one of the most anticipated IPOs this year, Hyundai's entry received a lackluster response during the bidding period, especially from retail investors.

Given the booming primary market, the discounted listing might come as a surprise for investors who had previously been riding the IPO wave with triple-digit premium listings.

At 10:30 am, Hyundai IPO shares were trading at Rs 1,865 price level, down by nearly 5 per cent on the National Stock Exchange.

The IPO valued Hyundai Motors' Indian unit at around $19 billion, with the parent company selling a 17.5 per cent stake in India’s second-largest carmaker.

However, the signal for a muted listing became evident after the company's Grey Market Premium (GMP) witnessed a sharp decline.

As per analysts, the subdued GMP of Rs 67 or 3.42 per cent, ahead of listing had already indicated limited enthusiasm for listing gains. On top of that, the company’s fully priced valuation contributed to the muted debut.

Retail investors not-so-impressed

While Hyundai Motor India's Rs 27,870-crore IPO received more than double the bids for the available shares on the last day of bidding, it was still lower than what the market was earlier anticipating.

Institutional investors also showcased strong interest in the IPO, but the bidding from retail investors was largely muted.

The automaker’s share sale received a lukewarm response from retail participants, with only 49 per cent of the retail portion subscribed. Retail investors applied for 2.44 crore shares out of a total retail quota of 4.94 crore shares on the final day of the public issue. One of the top reasons for the tepid response was likely owing to valuation concerns and the overall dim outlook in the automobile sector.

However, analysts remain optimistic on long-term growth prospects as Hyundai is the second largest passenger vehicle manufacturer in the domestic region.

"Despite the discounted listing, Hyundai Motor India's strong fundamentals, being the second-largest passenger vehicle manufacturer in India and its strategic focus on the SUV segment, continue to support its long-term growth prospects. Investors who entered with a long-term perspective may consider holding the stock, as future performance will likely be driven by the company’s competitive market position and product innovations," said Shivani Nyati, head of wealth, Swastika Investmart.