Hyundai Motor India’s highly anticipated Initial Public Offering (IPO) has made headlines as it officially debuted on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) on October 22, 2024. This IPO marks one of the largest in Indian market history, raising ₹27,870 crore (approximately $3.35 billion). Despite the anticipation, Hyundai’s shares made a muted debut, opening at a slight discount of ₹1,934, down 1.3% from its issue price of ₹1,960.
Background and IPO Performance
Hyundai Motor India, the second-largest automaker in the country, sought to capitalize on its dominant market position, particularly in the growing utility vehicle (UV) segment, which accounts for 63% of its domestic sales. The IPO was fully subscribed by October 17, with significant interest from institutional investors, particularly Qualified Institutional Buyers (QIBs), who subscribed nearly seven times their allocated shares. However, the offering faced a tepid response from retail investors, with only 50% of their shares subscribed, reflecting a cautious mood among smaller investors.
The company raised ₹8,315 crore from anchor investors prior to the public listing, involving major global funds like Fidelity, BlackRock, and the Government of Singapore, along with prominent domestic mutual funds. These substantial investments signaled strong institutional confidence in Hyundai’s long-term growth.
Market Sentiment and Concerns
Despite the strong backing from institutional investors, market sentiment was divided ahead of the listing. The Grey Market Premium (GMP) suggested a lower-than-expected debut price, indicating concerns about Hyundai’s short-term prospects. Analysts pointed to Hyundai’s relatively limited exposure to electric vehicles (EVs) and compressed natural gas (CNG) cars—an area where its competitors have a head start. Moreover, Hyundai’s production capacity constraints and the absence of new model launches were seen as potential headwinds.
Nevertheless, experts note that Hyundai’s long-term outlook remains strong, particularly due to its well-established position in the Indian passenger vehicle market, holding a 15% market share. The company has ambitious plans for capacity expansion, including acquiring General Motors’ Talegaon plant, which is expected to increase production by 170,000 units by 2026. Additionally, Hyundai’s focus on localization and premiumization strategies could help improve profitability in the future.
Long-Term Prospects
While short-term volatility is expected, analysts recommend a long-term investment perspective. Hyundai’s future EV launches, such as the much-anticipated Creta EV, reflect the company’s strategic pivot towards cleaner mobility solutions, aligning with global automotive trends. Hyundai’s strong fundamentals, including a high return on invested capital (RoIC) of 177% in FY24, demonstrate the automaker’s operational efficiency and potential for sustained growth in the coming years.
In summary, Hyundai Motor India’s IPO launch has attracted significant institutional interest, though retail investors remain cautious due to short-term market concerns. However, for long-term investors, Hyundai’s robust market presence, future expansion plans, and focus on innovation make it a stock to watch.