Hyundai Motors Share Price: Hyundai Motor India shares made a weak debut on the exchanges on October 22 after listing at 1.32 per cent discount at Rs 1,934 against its initial public offer (IPO) price Rs 1960 on the NSE.
The IPO valued the Indian unit of South Korea’s Hyundai Motor Co. at about $19 billion. The parent sold a 17.5 per cent stake in India’s second-largest carmaker in the deal.
While the offering was eventually oversubscribed more than two times, book-building was slower than some had anticipated. Hyundai’s deal saw strong demand from institutions, which flooded in on the last day of sale. Retail investors, however, only bought about half the portion that had been reserved for them in the IPO.
Individual traders were turned off by the parent company getting all of the IPO proceeds as well as cooling demand in India’s auto industry, analysts have said. The poor retail interest stands in contrast to the frenzy seen in some recent IPOs, particularly smaller issues.
GMP Ahead Of Listing
The grey market premium for Hyundai IPO has fallen to 2 per cent, with shares now trading at a premium of Rs 45-50 over the issue price of Rs 1,960. This reflects a decrease from the earlier surge to 5 per cent, though the shares have recovered from yesterday’s dip of -3 per cent, indicating fluctuating investor sentiment as the stock approaches its listing on October 22.
What Should Investors Do?
Shivani Nyati, Head of Wealth, Swastika Investmart Ltd., said: “Hyundai Motor India Limited’s IPO listed at Rs 1,934, marking a 1.33% loss against its issue price of Rs 1,960, which was largely in line with expectations. The IPO witnessed a moderate subscription, with an overall bid of 2.3 times. The subdued grey market premium (GMP) of Rs 67 (3.42%) ahead of listing had already indicated limited enthusiasm for listing gains, and the company’s fully priced valuation contributed to the muted debut. 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.”
Macquarie has initiated coverage on Hyundai Motor with an “Outperform” rating and a target price of Rs 2,235.
The firm views Hyundai as a strong player in premium passenger vehicle growth and believes it should trade at a higher PE multiple compared to its peers. Macquarie notes that Hyundai’s market share in key segments has stabilized or improved from recent lows, citing a favorable product mix and premium positioning. Additionally, they see potential benefits from powertrain options, including the company’s parent capabilities and possible market share gains.
Ajay Bagga, market expert, notes that the passenger vehicle segment is sluggish, and Indian auto companies are not trading at any discount, with investors paying a high premium overall. He advises that it’s not the best time to buy. Regarding IPOs, Bagga prefers a “wait and watch” approach, especially given the inflated listing gains seen in the SME and other segments.
Nomura has initiated coverage on Hyundai Motor with a buy rating and a target price of Rs 2,472
The company is riding on style and technology and its ongoing premiumization should drive high-quality growth. There is a long runway for the Indian car industry – current penetration at 36 cars/1,000 people.
HMI is poised for healthy long-term growth due to its style and technology. Capacity expansion in H2 and the launch of several new models (including four EVs) over the next 3-4 years are the key catalysts.
