For all the excitement around the biggest initial public offering (IPO) in Indian history, the public response to Hyundai’s share sale was underwhelming to say the least. Retail investors subscribed to just half the shares meant for them, while non-institutional investors took up 60% of their quota.
The ₹28,000 crore-odd issue met and exceeded its target only thanks to the interest shown by institutional investors, which bid for far more shares than they were originally assigned. At the retail level, it bucked the IPO trend. So, what went wrong? The valuation sought by the company, for one.
With a price band of ₹1,865-1,960 per share, its upper-end translates to 26 times its earnings for 2023-24 and 30 times this year’s projections—expensive for an auto company. A demand slump in India’s car market could also have weighed it down.
But does Hyundai’s weak retail draw also signal deflating sentiment in the primary segment as secondary prices on the stock market continue their slide from recent peaks?
It would take at least three readings to call a trend; so, how future IPOs pan out will be under watch. The upcoming IPO of Swiggy, a food-delivery firm, may be seen as a test case.
