Hyundai Motor India’s Rs 27,870 crore IPO received more than double the subscription on the last day of bidding i.e. October 17. According to National Stock Exchange (NSE) data, investors bid for Rs 23.63 crore, while the offer was for Rs 9.98 crore. The company’s shares will be listed on the stock exchanges on October 22. Institutional investors showed tremendous interest in this IPO and 6.97 times bidding was seen in the Qualified Institutional Buyer (QIB) segment.
A newspaper report quoted analysts as saying that demand from retail investors was sluggish in this IPO. This was due to concerns over high valuations, fall in gray market premium in shares and overall weak demand in the auto sector during the festive season. G Chokkalingam, Founder and Research Head, Equinomics Research Pvt Ltd, said that the demand from retail investors was weak because earlier also such big IPOs had proved disappointing after listing.
Another important reason was the decline in passenger vehicle sales. Chokkalingam said, ‘Hyundai Motor India has focused a lot on the SUV (Sports Utility Vehicle) segment and its growth has also been in double digits. However, now the growth of this segment is in single digits. Market analyst Ambrish Baliga said that a few days before the start of the subscription, the company had announced the number of shares to be issued and hence it was being estimated that this IPO could be worth Rs 25,000 crore. He said, ‘Due to the final size of the IPO being Rs 28,000 crore, its price was 11-12% more than the estimate and due to this, there was a huge decline in the gray market of the IPO.’
On the last day of bidding i.e. October 17, the gray market price of Hyundai’s IPO fell below 1%. Hyundai Motor India is the second largest auto company in the country after Maruti in the passenger vehicle segment and the company’s share in this segment is about 15 percent.
