Hyundai Motor India IPO Day 3: The initial public offering (IPO) of Hyundai Motor India, which opened on Tuesday, October 15, is witnessing tepid subscription. The Hyundai Motor India IPO price band has been fixed at ₹1,865 to ₹1,960 per equity share. By the end of the second day of subscription, the issue had seen an overall subscription of 0.42 times. Today (Thursday, October 17) is the last day of the issue's subscription. The current grey market premium (GMP) of Hyundai Motor India indicates the stock could see a flattish listing.
According to stock market observers, shares of the company are available at a premium of ₹17 in the grey market today. Considering the issue's upper price band of ₹1,960 and the current GMP, the stock is expected to debut on the Indian bourse at ₹1977, at a premium of 0.87 percent. Notably, Hyundai Motor India's GMP has significantly declined from the highest GMP recorded at ₹570.
The IPO is witnessing tepid demand. According to BSE data, by 1:51 PM on day 3 of bidding, the Hyundai Motor India IPO had been subscribed 2.07 times, the retail portion 0.45 times, the NII potion 0.41 times, and the QIB portion 6.17 times.
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Most experts and brokerage firms are positive about the IPO for the long term as they highlight the growth prospects of the company.
According to Master Capital Service, the domestic PV industry volume is expected to increase at a CAGR of 4.5- 6.5 per cent depending on the CAGR growth of India’s GDP.
The brokerage firm underscored Hyundai Motor's strong market share in the segment and its plans to maintain that position by expanding its passenger vehicle portfolio, leveraging its deep understanding of consumer preferences, and also focusing on increasing its EV market share.
"The company also intends to continue the premiumisation of its passenger vehicle portfolio and focus on calibrated manufacturing capacity expansion and efficient capital allocation. The issue is fully priced, and investors interested in the company can invest in the IPO for the long term," said the brokerage firm.
Aditya Birla Capital believes that the outlook for Hyundai continues to be strong owing to its strong parentage, leveraging HMC’s technology and R&D capabilities, and strong balance sheet.
However, Aditya Birla Capital highlighted that at the upper price band, Hyundai IPO is available at a rich valuation of 26 times its FY24 EPS, leaving little on the table for investors.
"We have a subscription recommendation for this issue for the long term. Hyundai has consistently grown stronger and has been one of the most recognised brands in India since its inception. It has also been the first mover in various PV categories," said Aditya Birla Capital.
Highlighting the valuation, Marwadi Shares and Finance said considering the trailing-twelve-month-June 24 EPS (earnings per share) of ₹76.56 on a post-issue basis, the company is set to list at a P/E (price-to-earnings) ratio of approximately nearly 26 times with a market cap of ₹1,59,258.06 crore, whereas its peers, Maruti Suzuki India Ltd, Tata Motors Ltd, and Mahindra & Mahindra Ltd, are trading at P/E ratios of approximately nearly 27 times, 10 times, and 36 times, respectively.
"We assign a subscribe rating to this IPO as the company is the second largest auto OEM in India and the leading exporter of passenger vehicles. Also, it is available at a reasonable valuation as compared to its peers," said Marwadi Shares and Finance.
Hyundai Motor India IPO, with a price band of ₹1865 to ₹1960 per share, opened for subscription on Tuesday, October 15, and will remain so till Thursday, October 17.
The ₹27,870.16 crore issue is an offer for sale (OFS) of 14.22 crore shares and does not have any fresh issue component.
The company is expected to finalise the share allotment on Friday, October 18.
Successful bidders may expect the shares credited to their demat accounts on Monday, October 21, while those who fail to get the allotment may get the refund on the same day.
Shares of the company may be listed on BSE and NSE on Tuesday, October 22.
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