Hyundai Motor India’s Biggest IPO Falls Flat: What Should Investors Do?

Hyundai Motor India’s IPO Listing: A Rough Start

Shares of Hyundai Motor India Ltd., the country’s largest IPO to date, made a much-anticipated market debut on Tuesday, October 22. However, instead of a grand opening, the shares were listed at a discount of 1.33% on the NSE at Rs 1,934 per share, and on the BSE at Rs 1,931 per share, down 1.47% from the issue price of Rs 1,960.

By 10:11 am, Hyundai Motor India’s share price had slipped further, down by 3.01% to Rs 1,875.75. The grey market premium (GMP) for Hyundai also took a hit, dropping from an earlier 5% premium to just 2% ahead of the listing. This fluctuation in GMP suggested wavering investor confidence as the stock approached its debut.

Hyundai Motor India IPO Overview: Record-Breaking but Underwhelming

Hyundai Motor India’s IPO had all the ingredients for success—it was the largest in Indian history, surpassing even the Life Insurance Corporation (LIC) IPO, raising Rs 27,870 crore in a fixed price band of Rs 1,865-1,960 per share. Despite its size and the strong brand backing, the IPO’s initial performance fell short of expectations.

The offer was entirely an Offer for Sale (OFS) of 14.2 crore shares, with the parent company, Hyundai Motor Global, selling off its stake. As with any OFS, the proceeds went directly to the selling shareholder, and Hyundai Motor India itself did not raise any capital through this IPO.

Market Sentiment and Hyundai’s Growth Story

Hyundai Motor India is the second-largest original equipment manufacturer (OEM) and second-largest exporter of passenger vehicles in India. The company holds a 14.6% market share in the domestic automobile industry.

However, September sales figures revealed a 10% year-on-year decline, with 64,201 units sold during the month. The company’s 2024 year-to-date sales stand at 5.77 lakh units, showing little to no growth from the previous year. While these figures may raise concerns, Hyundai’s long-term growth story remains solid, especially given India’s growing auto market.

What Should Investors Do Now?

For investors who missed out on the allotment, it might be wise to take a “wait and watch” approach. As the market digests the stock’s early performance, there could be better entry points ahead. Hyundai’s fundamentals are strong, and long-term investors could see the current dip as a buying opportunity once the price stabilizes.

Final Thoughts

While Hyundai IPO debut was less than spectacular, it’s essential to consider the long-term potential of this leading automaker. For now, patience may be key, and revisiting the stock when it offers a more attractive discount could prove beneficial for discerning investors.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.