Hyundai Motor India's IPO Sees Weak Demand from Big Investors, As Well As Retail Interest Low

Hyundai Motor India’s big IPO (Initial Public Offering), worth Rs 27,870 crore, got a lot of attention from big investors. By the last day of bidding on October 17, people wanted to buy more than twice the number of shares available. According to stock exchange data, 23.63 crore shares were requested, while only 9.98 crore were on offer. The shares are expected to be listed on the stock market on October 22.

A lot of the demand came from large institutions like banks and investment companies, who bid for nearly 7 times the number of shares available to them. However, regular, smaller investors were not as excited. Experts believe this is because of concerns about the high price of the shares, a fall in the grey market premium (where shares are traded unofficially), and weak demand in the auto sector, even during the festive season.

G Chokkalingam, a market expert, explained that retail investors (small buyers) were cautious because, in the past, big IPOs like this haven’t always performed well after listing. Another reason for low interest is the decrease in the sales of passenger vehicles. Hyundai’s focus is on SUVs (sport utility vehicles), which used to sell very quickly, but now their sales are growing more slowly.

Another market expert, Ambareesh Baliga, mentioned that before the IPO started, people thought the company would raise Rs 25,000 crore. But when the final amount was set at Rs 28,000 crore, the price of the shares became about 11-12 percent higher than expected. This caused the grey market price of the IPO to drop.

On the last day of bidding, Hyundai’s grey market premium fell below 1 percent, with shares being sold at only Rs 14 more than the IPO price. This suggests that the stock may not see a big jump in price when it gets listed on October 22.

Hyundai Motor India is the second-largest car manufacturer in India, with about 15 percent of the market, right behind Maruti Suzuki India. However, its market share has fallen from 17.6 percent in 2020 due to competition from companies like Maruti, Tata Motors, and Mahindra & Mahindra.