Shares of Hyundai Motor India dropped as a lot as 6% of their market debut on Tuesday, after a tepid response from retail buyers to the pricing of the nation’s largest preliminary public providing.
The inventory listed at 1,934 rupees on the Nationwide Inventory Alternate, under its supply worth of 1,960 rupees, and traded down 4% at 1,882.10 rupees by 12.48 p.m. (Hanoi time), giving the corporate a valuation of 1.53 trillion rupees ($18.2 billion).
Hyundai, India’s No. 2 carmaker with a market share of 15%, was concentrating on a valuation of $19 billion via the IPO.
Its report $3.3-billion IPO was oversubscribed greater than two-fold final week, led largely by institutional buyers, however pricing issues deterred retail buyers who nervous they might not have the ability to make features on the itemizing.
Shares of Indian rivals have additionally slipped in latest weeks as automobile gross sales sluggish after two years of report highs, with prospects delaying purchases on worries about cussed inflation.
“Hyundai’s problem has been stiffly priced and that appears to be weighing down on its itemizing as properly,” mentioned Arun Kejriwal, founding father of Kejriwal Analysis.
“Moreover, the volumes seen to this point are pushed solely by institutional buyers, and is somewhat poor for an IPO of Hyundai’s dimension.”
Tuesday’s itemizing in Mumbai is Hyundai Motor’s first debut outdoors its house market of South Korea and comes at a time when India’s fairness markets have risen sharply.
With competitors from home rivals Tata Motors and Mahindra & Mahindra, Hyundai Motor plans to make use of proceeds from its sale of a stake of 17.5% within the Indian unit to spend money on analysis and launch new merchandise.
“Hyundai Motor will play a vital position in Hyundai Motor India’s long-term progress via our collaboration in R&D, design, manufacturing,” the Korean automaker’s CEO, Jaehoon Chang, mentioned at a list ceremony in Mumbai.
Seven of India’s 10 largest IPOs, together with Hyundai India, reported itemizing day losses starting from 5% to 27%, in response to information from Dealogic.
Whereas Hyundai’s market valuation is far smaller than Indian market chief Maruti Suzuki’s $45 billion, analysts have expressed issues over the narrower hole of their price-to-earnings (P/E) ratios.
The problem had valued Hyundai at 26 instances its fiscal 2024 earnings, not far off the a number of of 29 for Maruti.
Some main brokerages, nonetheless, see long-term worth within the inventory.
Nomura began protection of Hyundai with a “purchase” ranking and worth goal of two,472 rupees. The brokerage mentioned it preferred Hyundai’s excessive focus of SUVs within the portfolio, which accounted for 67% of gross sales within the April-to-June 2024 quarter.
Equally, Macquarie analysts started protection with an “outperform” ranking and worth goal of two,235 rupees, saying Hyundai’s SUV-centric portfolio commanded a P/E premium.
“We will leverage our deep understanding of client preferences to efficiently develop our passenger car portfolio,” Hyundai India’s chief working officer Tarun Garg mentioned on the itemizing ceremony.
Shares of Maruti and Tata Motors have been down 1%, in keeping with the Nifty Auto index.
