Hyundai Motor India, recently garnered attention with its Initial Public Offering (IPO) conducted from October 15 to October 17, 2024. This IPO marked a significant milestone as the largest in the history of India’s stock market, with a valuation of ₹27,870 crores. Subsequently, on October 22, 2024, Hyundai shares were listed on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). However, the market debut fell short of the anticipated performance.
The initial public offering (IPO) was offered at a price range of ₹1,865 to ₹1,960 per share. Despite a strong subscription rate of 237%, the shares debuted at a discount. Hyundai’s stock opened at ₹1,931 on the BSE, which was 1.48% lower than the upper price band. The stock experienced a further decline during the trading session, closing at ₹1,820.40, representing a decrease of approximately 6% from the issue price.
Current Market Sentiment
The underwhelming response to Hyundai’s IPO can be attributed to a number of factors:
- Market Conditions: Broader market trends and investor sentiment have been cautious. The Indian rupee’s recent record low against the US dollar may have impacted investor confidence.
- Grey Market Premium (GMP): The GMP showed significant fluctuations in the days leading up to the listing. While initially displaying signs of recovery, it declined again just before the debut, indicating mixed investor sentiment.
- Investor Interest: Retail participation was notably low, with retail investors subscribing only 0.5 times, and non-institutional investors subscribing 0.6 times, indicating a lack of enthusiasm from these segments.
Analyst Perspectives and Target Prices
Despite the underwhelming initial performance, Hyundai’s long-term outlook continues to receive positive assessments from analysts:
- Nomura has established a target price of ₹2,472, indicating a 26% potential upside based on robust fundamentals and anticipated growth in vehicle sales, driven by the introduction of new models and an enhanced product mix.
- Motilal Oswal has also commenced coverage with a target price of ₹2,345, underscoring Hyundai’s competitive advantage in the SUV segment and its overall market standing as the second-largest passenger vehicle manufacturer in India.
- Additionally, other brokerages such as Macquarie and Emkay Financial Services have expressed guarded optimism while highlighting potential risks, including supply chain disruptions and regulatory hurdles that could affect near-term growth.
Hyundai’s emphasis on electric vehicles (EVs) and SUVs is expected to be a major catalyst for growth. The Indian automotive market remains underpenetrated, with only 36 cars per 1,000 people, indicating substantial potential for expansion. Analysts anticipate an approximate 8% annual growth rate for vehicle sales in the coming years.
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ELCTRIK Speaks
Hyundai IPO debut was disappointing, but analysts remain bullish with a target price of ₹2,472. Despite the initial underperformance, long-term prospects for Hyundai look positive due to anticipated growth in vehicle sales and the company's emphasis on electric vehicles and SUVs. Analysts highlight potential risks but overall express guarded optimism about Hyundai's future.
