MUMBAI: The highly anticipated Rs 27,870.2 crore initial public offering (IPO) of Hyundai Motor India (HMIL) the Indian arm of South Korean automaker Hyundai, the largest in India for 2024, which opened on Tuesday, 15 October and closed on Thursday, 17 October saw a lacklustre response from retail investors although it closed with an overall 2.37 times subscription. 

While on the last day of the share sale, just 50% of the retail portion was subscribed it saw aggressive bidding by Qualified Institutional Buyers (QIBs) attracting bids amounting to Rs 46,288.97 crore leading the subscription at 6.97 times, while the non-institutional investors (NII) portion saw 60% booking.

The IPO, priced between Rs 1,865 and RS 1,960 per share, had around 35% of the total shares in the offering reserved for retail investors, while QIBs and NIIs were offered 50% and 15% of the issue size, respectively. The offer was a complete offer-for-sale (OFS) where the company’s South Korean parent will be diluting some of the stake, and received bids for 23,63,26,818 shares as against the 9,97,69,810 shares on offer. 

This underwhelming participation stands in stark contrast to previous large IPOs in India, such as the Life Insurance Corporation (LIC) IPO in 2022, which saw robust retail interest.

Experts suggest that concerns over the IPO's valuation may have deterred retail and non-institutional investors from participating and said there were several factors influencing investor sentiment contributing to this subdued interest. Analysts pointed to concerns regarding industry growth and Hyundai's market share in a competitive automotive landscape. Additionally, some analysts felt that since the IPO was structured as a complete offer for sale it may have led to skepticism about the long-term value proposition for investors.

Since its inception until December 31, 2023, HMIL has exported 3.53 million passenger vehicles to over 150 countries, including Latin America, Africa, the Middle East, and Asia. HMIL operates a network of 1,366 sales points and 1,550 service points across India with a current vehicle portfolio of 13 passenger vehicle models across sedans, hatchbacks and SUVs. The company’s revenue from operations consistently increased from Rs 40,972.25 crore in 2021 to Rs 47,378.43 crore in 2022 and Rs 60,307.58 crore in 2023.

Reflecting the lacklustre interest from retail investors, the grey market premium, also known as the IPO GMP (an unofficially cited premium of a public issue in the unregulated market after the IPO announcements) for the unlisted shares of Hyundai Motor India Ltd is trading just Rs 5 higher than its issue price. 

Although the GMP is not an officially accepted standard and gives only a broad public indicator based on investor sentiments of the premium the grey market is expecting a 0.26 per cent listing gain from the public issue.  Since the GMP kept fluctuating on Friday the GMP of the Hyundai Motor India IPO which was at a plus of Rs 175 on October 9 and came down to Rs 5 fell consistently and was minus Rs 32, indicating a negative listing, although this is not a formal standard.