Hyundai Motor India’s shares fell 5% on their debut (Oct 22) due to lackluster retail interest in its IPO.
The stock launched at ?1,934, down from the offer price of ?1,960, and was trading at ?1,860, valuing the company at ?1.51 trillion (US$17.96 billion).
As India’s second-largest carmaker, Hyundai aimed for a US$19 billion valuation through its record US$3.3 billion IPO, which was oversubscribed mostly by institutional investors, but retail investors were put off by pricing concerns.
“The pricing of Hyundai’s IPO seems to be affecting its debut. Currently, trading volume is low and mainly from institutions,” said Arun Kejriwal from Kejriwal Research.
This is Hyundai’s first IPO launch outside South Korea, coinciding with a rise in India’s equity markets.
Previous big IPOs in India, like Life Insurance Corporation and Paytm, also faced similar drops on listing.
Only 2 out of India’s 10 largest IPOs have performed better than the S&P CNX 500 index post-listing, as per a recent Capitalmind report.
Hyundai’s valuation is significantly lower than market leader Maruti Suzuki (US$45 billion), but analysts worry about the closeness in P/E ratios—Hyundai valued at 26 times earnings, compared to Maruti’s 29 times.
Despite this, some brokerages see long-term potential, with Nomura giving it a “buy” rating and a target of ?2,472, citing Hyundai’s strong SUV sales.
Macquarie also rated it “outperform” with a target of ?2,235, emphasizing its SUV-focused sales strategy.
Meanwhile, shares of competitors Maruti and Tata Motors fell by 2%, with the Nifty Auto index down 1.7% as car sales in India slow due to inflation concerns.
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