Hyundai Motor India Hits Stock Market Today After $3.3 Billion Offering; GMP Hints At Muted Listing

Hyundai Motor Listing: Institutional investors showed strong demand, flooding in on the final day, while retail investors purchased only about half of their reserved share

Hyundai Motor Listing: Shares of Hyundai Motor India Ltd. are set to begin trading on Tuesday following a $3.3 billion initial public offering (IPO), marking the largest IPO in India's history. The offering, which valued the Indian unit of South Korea's Hyundai Motor Co. at approximately $19 billion, involved the parent company selling a 17.5 per cent stake in India's second-largest car manufacturer.

The grey market premium (GMP) for Hyundai Motor India has dropped to approximately Rs 50 per share, down from Rs 570 in late September, indicating a likely subdued listing as shares debut later on the day amidst high market volatility, according to market participants.

According to news agency Bloomberg, this IPO could set the tone for several upcoming billion-dollar deals in India, one of the world's most active markets for new share sales in 2024. The debut also coincides with the busiest week for Asia-Pacific listings in over two years, as companies and major shareholders push to close deals before the U.S. elections on November 5.

Despite being oversubscribed more than twice, the book-building process for Hyundai’s IPO moved slower than expected. Institutional investors showed strong demand, flooding in on the final day, while retail investors purchased only about half of their reserved share. Analysts suggest retail traders were discouraged by Hyundai's parent company retaining all IPO proceeds and concerns over cooling demand in India's auto industry. This stands in contrast to the high retail interest seen in smaller recent IPOs.

The broader enthusiasm for IPOs in India has been reflected in post-listing performance. According to Bloomberg data, new listings in India have risen by an average of 39 per cent on their first trading day this year, with IPOs over $500 million gaining an average of 66 per cent. However, Hyundai Motor India may face challenges related to its valuation.

Bloomberg Intelligence analyst Joanna Chen pointed out that the stock is priced about five times higher than its South Korean parent, although it aligns with Indian competitors like Maruti Suzuki India Ltd.

India's rapidly growing economy and expanding middle class offer significant growth potential for automakers. Suzuki Motor Corp.'s Executive Vice President, Kenichi Ayukawa, projected that India’s car market could reach 20 million units by 2047. In the fiscal year ending in March 2024, 4.2 million passenger vehicles were sold in India, according to the Society of Indian Automobile Manufacturers.

However, some analysts remain cautious about Hyundai Motor India’s IPO. “Hyundai Motor India’s IPO offers potential long-term value, but it is not suited for investors seeking quick gains,” said Devi Subhakesan, an analyst at Investory Pte, in a Smartkarma note. She cited valuation risks amid evolving consumer preferences and rising competition in the Indian auto sector.

Hyundai's IPO raised Rs 27,900 crore, surpassing the Rs 20,560 crore raised by Life Insurance Corporation of India’s 2022 listing, making it the largest Indian IPO in local currency terms. With Hyundai's successful offering, Indian IPOs have now raised over $12 billion in 2024, eclipsing the totals of the previous two years, though still below the record $17.8 billion in 2021. Other major debuts expected soon include food delivery giant Swiggy Ltd. and the renewable-energy unit of state-run NTPC Ltd.