Hyundai Motor India shares list at 1% discount over IPO price

Shares of Hyundai Motor India Ltd (HMIL) made a subdued debut on the stock exchanges on Tuesday, with the stock price of the automobile company listing at 1.3% discount over the issue price. HMIL shares made a debut at ₹1,934 on the NSE against the initial public offering (IPO) price of ₹1,960. 

The listing of Hyundai Motor was below the market expectations as the stock was commanding a grey market premium (GMP) of ₹45 in the grey market, estimating the listing price to be around ₹2,008, a premium of 2.45% over the IPO price. The company has seen a sharp turnaround in its GMP price as it dropped into negative terrain to ₹32 last week after its issue closed with lukewarm demand from investors.

The ₹27,870 crore IPO of HMIL, which was entirely an offer for sale of 14.22 crore shares by its South Korean parent, concluded with 2.37 times subscription amid muted response from retail as well as non-institutional investors (NII). The issue, having a price band of ₹1,865-1,960 per share, received 0.50 times bids in the retail category and 0.60 times in the NII segment. The quota reserved for qualified institutions buyers (QIB) were booked 6.97 times, while the employee portion garnered 1.74 times subscription.

Dalal Street was expecting HMIL to make a steady debut with limited listing gains, but maintained that robust fundamentals make it an attractive long-term investment.

“While Hyundai Motor India holds a strong market position as the second-largest passenger vehicle company in India, and its strategic focus on SUVs is promising, the overall market sentiment and IPO size may limit listing gains,” says Shivani Nyati, Head of Wealth, Swastika Investmart Ltd.

Nyati anticipates a steady debut for Hyundai, saying that immediate listing gains may be modest, but its robust fundamentals make it an attractive long-term investment.

“Investors with a long-term outlook and the ability to navigate potential listing challenges may consider holding onto their investments post-listing for potential future growth,” she says.

Another brokerage house, Master Capital Services in a note says that despite some concerns regarding short-term listing gains due to subdued grey market premium, the company offers steady growth prospects amid industry tailwinds, robust financials and healthy SUV product demand. “Hyundai’s leadership in India's passenger vehicle market, along with its strategic focus on electric vehicles makes a compelling investment for long-term investors.”

Meanwhile, Mehta Equities expects flat to negative market debut of Hyundai, citing sluggish undersubscription demand from NII’s & retail investors and market sentiments on overvaluation concern followed by lower demand and over supply scenario in the sector.

“For allotted investors, one should not expect a quick bucks on listing day. Hence, we recommend HOLD despite knowing short term volatility in the sector demand and supply scenario. For non-allottees, we advise to wait and watch for the price to settle and revisit the space with better discounted opportunity as for long-term investors, Hyundai’s growth story remains intact in line with India Growth,” says Prashanth Tapse, Senior VP (Research), Mehta Equities. 

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