Hyundai Motor India’s shares fell 5% in their market debut on October 22 due to weak interest from retail investors in its IPO pricing.
The stock opened at 1,934 rupees, below the offer price of 1,960 rupees, and was last trading at 1,860 rupees, valuing the company at 1.51 trillion rupees (US$17.96 billion).
As India’s second-largest carmaker, Hyundai aimed for a US$19 billion valuation through its record-breaking US$3.3 billion IPO, which was oversubscribed mainly by institutional investors.
Concerns over pricing kept retail investors away, according to Arun Kejriwal of Kejriwal Research, who noted that only institutional demand was driving the volumes.
This listing in Mumbai is Hyundai’s first outside South Korea, taking place amid strong gains in India’s stock markets.
Hyundai’s IPO follows other large ones like Life Insurance Corporation and Paytm’s One97, which also debuted at significant discounts of 8% and 9%, respectively.
Out of India’s top 10 IPOs, only two have outperformed the S&P CNX 500 index since listing.
Hyundai’s valuation, at 26 times its fiscal 2024 earnings, is close to the 29 times of market leader Maruti Suzuki, raising some concerns among analysts.
However, brokerages like Nomura and Macquarie see long-term value in Hyundai’s stock, giving it “buy” and “outperform” ratings with price targets of 2,472 and 2,235 rupees, respectively, citing its strong SUV focus.
Meanwhile, shares of rivals Maruti and Tata Motors also dropped 2%, with the Nifty Auto index down 1.7%. Hyundai’s listing occurs amid slowing car sales in India due to inflation concerns.
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