Hyundai India's Shares Fall 2% in Debut Trade After Record $3.3 Billion IPO

Hyundai Motor India's much-anticipated initial public offering (IPO) concluded on October 17, raising a record $3.3 billion. Despite the impressive haul, the automaker's shares fell 2% in their debut trade on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) on October 22. This article explores the factors contributing to Hyundai India's muted opening day performance.

Hyundai India's IPO, the largest in the country's history, received a tepid response from retail investors. The overall subscription figures looked good, but the majority of the offer size was undersubscribed by Non-Institutional Investors (NII) and Retail Investors. This lackluster response from retail investors played a significant role in the IPO's muted debut.


Market sentiment and concerns about Hyundai's valuation and industry trends also contributed to the IPO's opening day performance. The overall market sentiment was weak, with Asian and Wall Street indices posting losses. Additionally, investors were concerned about Hyundai's high valuation compared to its peers and the slowing demand in the passenger vehicle market. The high inventory levels across the sector and the 100% offer-for-sale (OFS) component without any fresh issue left nothing on the table for new investors to gain.


The grey market premium (GMP) for Hyundai Motor India shares also influenced investor sentiment prior to the IPO. The GMP was in the range of ₹65 - 70 per share, indicating that investors were not overly optimistic about the IPO's prospects. The estimated Hyundai Motor India share listing price would be in the range of ₹2,025 - 2,030 apiece, a modest premium of 3.5% to the IPO price of ₹1,960 per share.


In conclusion, the tepid response from retail investors, market sentiment, concerns about Hyundai's valuation and industry trends, and the grey market premium all contributed to Hyundai India's shares falling 2% in their debut trade. Despite the muted opening day performance, Hyundai's robust fundamentals and strong market position 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 for potential future growth.