Hyundai Motor India Ltd is making its highly anticipated debut on the Indian stock market today, October 22, 2024. This follows the company’s initial public offering (IPO), which was open for subscription from October 15 to October 17. The allotment of shares was finalized on October 18, and shares will be listed on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) starting at 10:00 AM.
Main Points
IPO Overview
Hyundai’s IPO is noteworthy as it is the largest in Indian history, raising approximately ₹27,870 crore (around $3.3 billion). The shares were offered within a price band of ₹1,865 to ₹1,960 per share. The entire offering consisted of an offer-for-sale (OFS) of 14.22 crore equity shares by its parent company, Hyundai Motor Company. This means that Hyundai Motor India will not receive any proceeds from this IPO.
Despite overall subscription being 2.37 times, interest varied significantly across investor categories. Qualified institutional buyers (QIBs) showed strong demand, subscribing 6.97 times their quota, while retail investors only subscribed 50% of their reserved portion. Non-institutional investors (NIIs) subscribed to 60% of their allocation.
Market Sentiment and Grey Market Premium
As the listing day approached, the grey market premium (GMP) for Hyundai shares indicated a muted trend. Currently, the GMP is fluctuating between ₹65 and ₹70 per share, suggesting that shares may list at around ₹2,025 to ₹2,030—approximately a 3.5% premium over the IPO price of ₹1,960. However, analysts express caution about a potential flat or negative debut due to sluggish demand and concerns over high valuations compared to peers.
Prashanth Tapse from Mehta Equities noted that investors should not expect quick profits on listing day and recommended holding onto shares amid expected short-term volatility in the sector. He advised non-allottees to wait for prices to stabilize before considering an investment.
Expert Opinions
Shivani Nyati from Swastika Investmart Ltd echoed similar sentiments, suggesting that while immediate gains may be modest, Hyundai’s strong fundamentals make it a compelling long-term investment. She emphasized that investors should focus on holding their investments post-listing for potential future growth. Analysts attribute the lukewarm response from retail and non-institutional investors to several factors:
- High Valuations: Concerns over overvaluation compared to competitors.
- OFS Structure: The complete offer-for-sale structure left no fresh capital for new investors.
- Market Conditions: A general slowdown in demand across the automotive sector has raised concerns about inventory levels and sales figures.
Company Background
Hyundai Motor India is the second-largest player in India’s passenger vehicle market with a market share of approximately 14.6%. The company has been focusing on expanding its SUV lineup and venturing into electric vehicles (EVs), which are seen as critical growth areas in India’s evolving automotive landscape.
In September alone, Hyundai sold around 64,201 units—a decline of about 10% year-on-year—reflecting broader challenges within the industry. Despite this slowdown, analysts remain optimistic about Hyundai’s long-term prospects due to its established market position and strategic initiatives.
Conclusion
As Hyundai Motor India Ltd prepares for its stock market debut today, all eyes will be on how its shares perform amid fluctuating investor sentiment and market conditions. The company’s robust fundamentals provide a solid foundation for long-term growth; however, immediate listing gains may be limited due to current market dynamics.
Disclaimer: The information given in this article is from investment experts and brokerage companies, they do not represent Local Haryana. Before taking any investment related decision, you must consult a certified expert.
