Hyundai Motor India’s shares fell 2% in their market debut today, after a tepid response from retail investors to the country’s largest ever initial public offering.

The stock listed at 1,934 rupees on the National Stock Exchange, compared to its issue price of 1,960 rupees, and was last trading down 2% at 1,920 rupees at 0431 GMT.

Hyundai is India’s No. 2 carmaker with a 15% market share. Its record $3.3 billion IPO was oversubscribed more than two-fold last week, led largely by institutional investors, but pricing concerns deterred retail participation.

Tuesday’s listing in Mumbai is Hyundai Motor’s first such debut outside its home market of South Korea and comes at a time when India’s equity markets have risen sharply.

The two-biggest IPOs prior to Hyundai India – Life Insurance Corporation and Paytm parent One97 communications – both listed at a steep discount.

While Hyundai’s market valuation is much smaller than Indian market leader Maruti Suzuki’s $48 billion, analysts have expressed concerns over the narrower gap when valued by their price-to-earnings ratios.

The issue had valued Hyundai at 26 times its fiscal 2024 earnings, not far off the 29 times multiple for market leader Maruti.

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The Hyundai Motor India IPO which was a 100% offer for sale by its parents opened for subscription on Tuesday in the price band of ₹1,865 and ₹1,960 per share. File.
| Photo Credit: Reuters

India’s biggest ever Initial Public Offering (IPO) of Hyundai Motor India Ltd., the bidding for which ended on Thursday. received lukewarm response from retail investors but was subscribed 2.37 times helped by Qualified Institutional Buyers (QIBs).  

As per data from the BSE, updated at 7 p.m. on Thursday, the IPO was subscribed 6.97 times in the QIBs category and 0.50 times in Retail Individual Investors category. The employee portion was subscribed 1.74 times.

Going by this, the IPO received lowest retail subscription among some of the big IPOs that had hit the Indian capital markets. 

While the LIC IPO had seen retail investor subscription of 1.99 times, it was 2.31 times for Coal India and about 15 times for Reliance Power Ltd., according to analysts.

The Hyundai Motor India IPO which was a 100% offer for sale by its parents opened for subscription on Tuesday in the price band of ₹1,865 and ₹1,960 per share. 

At the upper band the IPO would fetch ₹27,870.16 crore.

The 100% OFS by the parent was not liked by the retail investors as no money would be coming to the company, analysts said adding the pricing was too aggressive to make it attractive for retail investors to make any profit. Thus the gray market premium was low.

Commenting on the below expectation participation of retail investors Arun Kejriwal, founder, Kejriwal Research said, “They did not apply because the issue was expensive by about ₹200 and that is why the market premium crashed from ₹700 to Rs ₹500.” 

He said the QIB portion was subscribed more because they are long term investors who have deep pockets. “But retail investor looks for a quick return and they do not have that kind of capacity to hold on to the issue,” he added.

The allotment of shares is scheduled on Friday and shares will be listed on 22 October.

Image for representational purposes only.
| Photo Credit: REUTERS

South Korean automaker’s Indian arm Hyundai Motor India Ltd will launch the largest initial public offering (IPO) in the country’s history next week, aiming to raise ₹27,870 crore (about $3.3 billion).

This IPO will surpass the ₹21,000 crore offering by Life Insurance Corporation of India (LIC) in May 2022.

Apart from these two, the biggest initial share-sales in India include One97 Communications (Paytm), which mobilised ₹18,300 crore in November 2021, followed by Coal India’s ₹15,199 crore in October 2010, Reliance Power’s ₹11,563 crore in January 2008, and General Insurance Corporation of India’s ₹11,176 crore in October 2017.

Hyundai Motor India Ltd (HMIL) has set a price band of ₹1,865 to ₹1,960 per share for the offering, valuing the automaker at ₹1.6 lakh crore (about $19 billion).

The offering will open for public subscription on October 15 and conclude on October 17. Anchor investors will bid on October 14.

With this massive IPO, Hyundai Motor India seeks to build on its growing market presence and capitalise on strong demand for its vehicles in the country. The offering is expected to draw significant investor interest.

The company’s proposed IPO is entirely an Offer-for-Sale (OFS) of 142,194,700 equity shares by promoter Hyundai Motor Company, with no fresh issue component.

This development marks a significant milestone for the Indian industry, as it is the first initial share sale of an automaker in over two decades, following Japanese carmaker Maruti Suzuki’s listing in 2003.

The South Korean parent is diluting some of the stake through the OFS route. Since the public issue is completely an OFS, Hyundai Motor India Ltd, the second largest carmaker in India after Maruti Suzuki India, will not receive any proceeds from the IPO.

HMIL expects that the listing of the equity shares will enhance its visibility and brand image and provide liquidity and a public market for the shares.

At the upper end of the price band, the IPO size has been pegged at Rs 27,870 crore HMIL commenced operations in India in 1996 and is selling 13 models across segments.

The IPO launch comes at a time when the primary market is experiencing strong interest from both issuers and investors across various sectors.

Moreover, 63 companies have already mobilised around ₹64,000 crore collectively via mainboard, marking a 29% increase from ₹49,436 crore collected by 57 firms through the route in the entire 2023.