Hyundai IPO allotment tomorrow: Check final subscription, expected listing gains

Hyundai Motor India IPO: The public issue was initially met with hesitation from investors, but by the close on Thursday, October 17, it had been subscribed more than twice.

In Short

• Hyundai IPO subscribed 2.37 times on final day
• QIB section leads with 6.97 times subscription
• IPO allotment to be finalised on October 18, 2024

Hyundai Motors India's initial public offering (IPO) has gained some momentum on its final day of bidding. The IPO, which opened on October 15, was initially met with hesitation from investors, but by the close on Thursday, October 17, 2024, it had been subscribed more than twice.

Much of the demand came from Qualified Institutional Buyers (QIBs), although other investor categories remained cautious due to concerns over valuations and a falling grey market premium.

By the end of the final day, Hyundai's IPO was subscribed 2.37 times overall. The retail category was subscribed 0.50 times, non-institutional investors (NIIs) subscribed 0.60 times, while QIBs led the charge with a subscription of 6.97 times, as of 5:15 PM on October 17, 2024.

Jaspreet Singh Arora, Chief Investment Officer of Equentis, highlighted several concerns that could affect Hyundai's short to medium-term prospects.

“While Hyundai is a major player in India’s auto industry, there are several factors that might dampen its listing performance in the near future. The passenger vehicle (PV) industry is expected to grow at a slower pace of 4.5%-6.5% over FY24-29, compared to 5% in the previous five years, according to CRISIL. Additionally, Hyundai’s presence in electric vehicles (EVs), hybrids, and CNG cars is limited, making up just 11% of its portfolio. This is much lower than its competitors, who are further ahead in adapting to the shift towards EVs,” said Arora.

He also pointed out that Hyundai operates in a highly competitive market where price cuts and incentives are common. Limited production capacity and a lack of new model launches add to the challenges the company faces in standing out from its peers. Another concern is Hyundai India’s operational structure, as it does not own Kia Motors, which operates independently but competes in a similar market segment. This could lead to conflicts of interest that may affect Hyundai's performance.

Arora also noted that historical trends of large IPOs, such as Paytm, Coal India, and LIC, have shown that stocks from such offerings tend to face challenges during the first 12 to 24 months after listing. "There is usually an overhang from large share floats and the need for promoters to reduce their stake below 75% to comply with Sebi regulations," he added.

GREY MARKET PREMIUM

The grey market premium (GMP), which indicates the potential listing price of a stock, has not been promising for Hyundai's IPO. As of October 17, 2024, at 4:53 PM, the GMP stood at Rs 0, indicating no premium over the issue price. With a price band of Rs 1,960, the estimated listing price remains at Rs 1,960, meaning no immediate gains are expected for those looking for a quick profit on the listing day.

IPO ALOTTMENT

Investors who have applied for the Hyundai IPO can check the allotment status through KFin Technologies Limited, which is the official registrar for the issue. Allotment details can also be found on the Bombay Stock Exchange (BSE) website.

The allotment for the Hyundai Motor IPO is set to be finalised tomorrow, Friday, October 18, 2024. After that, the shares will be listed on both the BSE and the National Stock Exchange (NSE). The tentative listing date is scheduled for Tuesday, October 22, 2024.

(Disclaimer: The views, opinions, and recommendations expressed in this article are those of experts and brokerages. They do not reflect the views of the India Today Group. It is advised to consult a qualified broker or financial advisor before making any investment decisions.)