Hyundai Motor India’s Rs 27,560 crore IPO barely managed to sail through on the third and final day of the bidding process, thanks to the push from qualified institutional bidders (QIBs), while the portions of HNI and retail investors remained undersubscribed. However, the under subscription of the Hyundai IPO does not guarantee allotment to the investors.
According to the IPO rules, all applications, which are valid, but made below the cut-off price shall stand cancel. Investors for these applications will not receive any allotment. It means that investors will not get any allotment if they have applied for the issue below the issue price or the cut-off price/issue price.
It also means that investors will not get shares at the lower end of the price band at Rs 1,865. The issue price as of now remains at the higher end of the price band at Rs 1,960. The deficit in HNI and retail category shall be fulfilled from over-demand in the QIB category.
Prashant Tapse said that since QIB portion is oversubscribed around 7 times and they have applied the upper end of the price. They the allotment, by default, shall be done at Rs 1,960 only, that is the upper end of the price band. “The remaining portion of other two categories shall go institutional bidders, he said.
BSE data suggest at bids for more than 4.24 lakh lots are below the cut off price. Even more than 23,000 lots were applied below the cut off price. The BSE data did not show the data for HNI investors.
Kranthi Bathini, Director of Equity Strategy at WealthMills Securities said that there was a lot of buzz around the price band of Hyundai Motors but it received a lukewarm response from retails and HNI investors, but QIBs oversubscribed.
“For the retail investors, market sentiments are the key drivers of the market, instead of fundamentals. Majority of the small investors apply for IPOs for listing gains only and not for long term. Hyundai did not have much to offer in terms of listing so they kept away from the issue,” said Bathini.
The IPO of Hyundai Motor India was open for bidding between October 15 and October 17 as the company sold its shares in the fixed price band of Rs 1,865-1,960 per share with a lot size of 7 equity shares. It was entirely an offer-for-sale (OFS) up to 14,21,94,700 equity shares by its South Korean parent Hyundai Motor Company.
Grey market premium (GMP) of Hyundai Motor India has seen a sharp correction after disappointing bidding for the issue. Last heard, the company was commanding a discount of Rs 55-60 per share, suggesting a loss of around 3 per cent for the investors on listing. Interestingly, it has lost its entire ground in the unofficial market.
