Hyundai Motor India IPO Day 3: A Tepid Subscription Amid Market Anticipation
The initial public offering (IPO) of Hyundai Motor India, which commenced on Tuesday, October 15, is currently experiencing a lackluster response from investors. With the IPO price band set between ₹1,865 and ₹1,960 per equity share, the overall subscription rate by the end of the second day stood at a mere 0.42 times. As today, October 17, marks the final day for subscription, market watchers are keenly observing the developments.
Current Grey Market Premium (GMP)
As of today, the grey market premium (GMP) for Hyundai Motor India shares is reported at ₹17. This suggests that the stock may debut on the Indian stock exchanges at around ₹1,977, reflecting a modest premium of 0.87 percent over the upper price band. Notably, this GMP has seen a significant decline from its peak of ₹570, indicating waning investor enthusiasm.
Subscription Status on Day 3
As of 1:51 PM on the third day of bidding, the subscription figures reveal a mixed picture. The overall subscription has reached 2.07 times, with the retail portion at 0.45 times, the non-institutional investors (NII) segment at 0.41 times, and the qualified institutional buyers (QIB) portion showing a stronger interest at 6.17 times. This disparity in subscription rates raises questions about the IPO’s appeal across different investor categories.
Should You Apply for the Hyundai Motor India IPO?
Despite the tepid demand, several experts and brokerage firms maintain a positive outlook on the long-term prospects of Hyundai Motor India. According to Master Capital Service, the domestic passenger vehicle (PV) industry is projected to grow at a compound annual growth rate (CAGR) of 4.5-6.5 percent, contingent on India’s GDP growth. The firm emphasizes Hyundai’s strong market share and its strategic plans to expand its passenger vehicle portfolio, enhance its electric vehicle (EV) market presence, and focus on premiumization.
Aditya Birla Capital echoes this sentiment, highlighting Hyundai’s robust parentage and its ability to leverage the technological and research capabilities of Hyundai Motor Company (HMC). However, they caution that at the upper price band, the IPO is priced at a high valuation of 26 times its FY24 earnings per share (EPS), which may limit immediate upside for investors.
Marwadi Shares and Finance also provides a favorable assessment, noting that Hyundai is the second-largest auto original equipment manufacturer (OEM) in India and a leading exporter of passenger vehicles. They argue that the IPO is reasonably valued compared to its peers, which further supports their recommendation to subscribe.
Key Details of the Hyundai Motor India IPO
The Hyundai Motor India IPO, with a total issue size of ₹27,870.16 crore, consists solely of an offer for sale (OFS) of 14.22 crore shares, with no fresh issue component. The subscription window opened on October 15 and will close today, October 17. The share allotment is expected to be finalized on Friday, October 18, with successful bidders likely to see shares credited to their demat accounts by Monday, October 21. The anticipated listing on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) is scheduled for Tuesday, October 22.
Conclusion
As the Hyundai Motor India IPO approaches its conclusion, the mixed subscription figures and declining GMP indicate a cautious sentiment among investors. While experts highlight the company’s long-term growth potential and market position, the high valuation at the upper price band raises concerns about immediate returns. Investors are advised to weigh these factors carefully and consider their investment strategies in light of the current market conditions.
For those looking to stay updated on market developments, further information can be accessed through various financial news platforms. As always, consulting with certified financial advisors is recommended before making any investment decisions.