The much-anticipated Hyundai India IPO is set to debut on October 22, 2024, on the BSE and NSE, following its historic Rs 27,870 crore offer.
While the initial response from retail investors was lukewarm, strong demand from Qualified Institutional Buyers (QIBs) led to an overall subscription of 237%.
As the listing date approaches, the grey market premium (GMP) for Hyundai Motor India shares has experienced significant fluctuations, reflecting investor uncertainty about its market debut.
With Hyundai’s share price in the grey market rebounding to a positive premium just before the listing, all eyes are on its performance.
Hyundai India IPO overview
The Hyundai India IPO, the largest ever in India’s stock market history, saw a muted response from retail investors, with only 50% of the allotted shares being subscribed.
However, the QIB segment oversubscribed nearly seven times, demonstrating strong institutional confidence. Non-institutional investors (NII) showed lower interest, with their portion being subscribed to just 60%.
The company aims to raise Rs 27,870 crore through the offer, pricing shares between Rs 1,865 and Rs 1,960 each, with a minimum bid of 7 shares per lot.
Hyundai Motor India Ltd (HMIL), a subsidiary of South Korean automaker Hyundai Motor Company, plans to enhance its visibility and brand image through this listing.
The automaker has been a dominant player in India, consistently holding the second-largest market share in the passenger vehicle sector. The company’s portfolio boasts 13 models, including best-sellers like Creta and Verna, solidifying its position in the SUV and sedan segments.
Grey Market Premium (GMP) and market sentiment
One of the key factors influencing the IPO’s reception has been the volatility of the grey market premium (GMP).
After initially hitting a high of Rs 570 in September, the GMP for Hyundai shares nosedived into negative territory just days before the listing, causing concerns among investors.
As of October 21, the GMP rebounded to Rs 95, suggesting a possible listing gain of around 5%.
This recovery signals renewed optimism, but the GMP’s unpredictable swings reflect lingering doubts over Hyundai’s valuation and the overall weak demand in the auto sector.
The term “grey market premium” refers to the price investors are willing to pay above the IPO issue price, even though this market operates outside the official stock exchanges.
While the GMP often provides insight into listing day performance, it is not always a reliable indicator.
For Hyundai, the grey market’s fluctuating sentiment could lead to either a modest or muted debut, with the final listing price still uncertain.
Hyundai Motor India’s long-term outlook remains strong
Despite the pre-listing jitters, Hyundai Motor India’s long-term outlook remains strong.
The company continues to be a leader in the Indian auto industry, backed by solid demand for its models like Creta and Verna.
Its Chennai plant, which had an installed capacity of 770,000 units by FY 2023, is expected to play a critical role in meeting future demand as the automaker plans to expand its product lineup in India.
Hyundai Motor India’s IPO listing will be closely watched by investors, with the grey market premium offering mixed signals.
While institutional investors have shown strong support, retail investors remain cautious amid concerns over valuation and broader market conditions. Investors should keep an eye on Hyundai’s share price movement post-listing to assess the stock’s true potential.
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