The initial public offering (IPO) of Hyundai Motor India Ltd (HMIL) finally picked up momentum on the last day (Day 3) of bidding process, thanks to institutional investors and employees. As per BSE data available on Thursday, the category reserved for qualified institutional buyers (QIBs) got a whopping 6.97x bids and the portion for employees was subscribed 1.74 times.
The automaker’s initial share sale continued to attract a tepid response from retailers on Day 3, with the respective portion getting partially (50 per cent) booked only. Retail investors applied for 2,49,63,372 shares as against the total retail quota of 4,94,95,705 shares.
A market expert blamed the ongoing volatility in stock market for the muted retail participation. “With domestic benchmarks trading at two-month low levels, we can see some softness in the primary market. Hyundai is so far the largest IPO in India and retail investors were not that excited, given the timing of IPO,” said Kranthi Bathini, Director of Equity Strategy at WealthMills Securities. “Hyundai Motor is a formidable player in the OEM space. So, it is definitely a long-term bet in the auto segment,” the market expert added.
The segment kept for non-institutional investors (NIIs) saw slightly better response as compared to retailers and was subscribed 60 per cent. The market seems uncertain about Hyundai’s IPO as funds are flowing to the promoters, Deven Choksey, MD of DR Choksey FinServ Private, told Business Today TV. The IPO is more suited for institutional investors, who may take advantage of the promoters’ share sale, rather than retail investors, the market veteran also said.
Overall, the Hyundai Motor issue received 23,63,26,265 bids against 9,97,69,810 shares on offer with a total subscription of 2.37 times.
“Hyundai, like Maruti Suzuki, is a global company and has access to R&D and the latest technological trends that are happening across the globe. This is important in the car industry which is going through a massive change such as electrification, battery storage, etc. Hyundai is the second-largest player in India after Maruti and has about 13-14 models. Apart from the global R&D access, it is developing battery storage technologies within India. Hyundai also has a range of EV models which will further propel future growth. If we add up all these things together, the company will trade at the IPO price of about 22-23x, reflecting a profit growth north of 20 per cent. So, for a company as large as Hyundai to trade at that kind of growth along with an (estimated) RoE (Return on Equity), which is in the 20s, are very decent numbers,” said Chakri Lokapriya, Managing Partner at RedStrawBerry LLP.
Grey market premium (GMP)
In the grey market, Hyundai Motor shares were last seen trading flat against its issue price of Rs 1,960 (upper price band). The stock is likely to be listed on October 22.
Chennai-based Hyundai Motor India sold its shares in the range of Rs 1,865-1,960 apiece. And, investors had applied for a minimum of 7 equity shares and in multiples thereafter.
The automaker aims to raise Rs 27,856 crore via the initial share sale, making it the largest-ever IPO in Indian markets. It was entirely an offer-for-sale (OFS) by its South Korean parent Hyundai Motor Company. Ahead of its IPO, the company raised Rs 8,315.3 crore from anchor investors.
Hyundai Motor India is a part of South Korea’s Hyundai Motor Group, which is the third largest auto original equipment manufacturer (OEM) in the world based on passenger vehicle sales. It manufactures and sells four-wheeler passenger vehicles, including models such as sedans, hatchbacks, SUVs, and electric vehicles (EVs).
