Hyundai Motor India IPO: A Rocky Start as Shares Tumble on Debut

Hyundai Motor India, the second-largest car manufacturer in the country, recently made headlines with its initial public offering (IPO) that raised ₹27,870 crore, marking it as the largest IPO in Indian history. However, the much-anticipated market debut didn't go as planned, with shares witnessing a significant decline right after listing.

IPO Highlights

• Listing Price: Shares debuted at ₹1,934 on the NSE and ₹1,931 on the BSE, slightly below the issue price of ₹1,960.
• Market Performance: Following the listing, Hyundai Motor India shares plunged nearly 6%, closing at ₹1,845 on the NSE and ₹1,846.95 on the BSE, marking a drop of around 5% from the issue price.
• Brokerage Ratings: Major brokerages have taken notice, with Macquarie and Nomura initiating coverage with buy ratings. Motilal Oswal has set a target price of ₹2,345, indicating a 20% upside potential, while Emkay issued a ‘reduce’ rating with a target price of ₹1,750.

Factors Behind the Decline

Despite a strong institutional response, with the IPO being subscribed 2.37 times overall, retail investors showed lukewarm interest, buying only half of the reserved shares. Analysts attribute the initial drop to:

1. High Valuation Concerns: The valuation of the shares has been perceived as high, especially in light of recent trends in consumer sentiment and declining urban vehicle sales.
2. Market Sentiment: The overall market indices, including Nifty 50 and Sensex, also faced downward pressure, impacting Hyundai's stock performance.

Future Outlook

Euisun Chung, Hyundai Motor Group's Executive Chair, emphasized the company's commitment to India, stating, "This IPO demonstrates our commitment to this great nation." The company aims to utilize the funds raised for new product development and enhancing its research and development capabilities.

Hyundai has a robust plan for capital expenditure amounting to ₹32,000 crore to be spent by 2032, focusing on capacity expansion and a strong electric vehicle localization ecosystem.

Conclusion

Hyundai's IPO is a significant milestone, showcasing the company's long-term vision for growth in India. While the initial market response may not have met expectations, analysts remain optimistic about the company’s future, citing potential long-term value for investors. As Hyundai continues to navigate the challenges of the Indian automotive landscape, it aims to solidify its position as a key player in the market.

Reference from :-  https://www.thehindubusinessline.com/markets/stock-markets/hyundai-stocks-hyundai-share-price-hyundai-ipo-listing-22-oct-2024/article68781660.ece