Hyundai Motor India’s Stock Declines in Debut After Record IPO
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(Bloomberg) -- Shares of Hyundai Motor India Ltd. slid 7.2% in their Mumbai debut on Tuesday, following the nation’s largest-ever initial public offering that drew poor response from retail investors.
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The stock finished its first trading session at 1,819.60 rupees after shares were priced at 1,960 rupees apiece, the top of the IPO’s marketed range. South Korea’s Hyundai Motor Co. sold a 17.5% stake in its Indian unit via the deal, seeking to benefit from the investor frenzy for share sales in the South Asian nation, which is one of the world’s most vibrant venues for listings this year.
Retail investors had bought only about half the portion reserved for them in the Hyundai IPO. Overall too, book-building was slower than some had anticipated, with the offering eventually oversubscribed more than two times only after institutions flooded in on the last day of a three-day bidding period.
Individual traders were turned off by the parent company getting all of the deal proceeds as well as cooling demand in India’s auto industry, analysts said earlier. The poor retail interest for the deal stood in contrast to the frenzy seen in some recent IPOs, particularly smaller issues.
“This IPO was basically saved by the institutions,” said Ambar Taneja, chief investment officer of the Cirque India Equity Fund at Geomatrix (HK) Ltd. “It’s a healthy sign that the retail investor is also discerning and knows what the valuations are.”
Some analysts had previously flagged concerns about the priciness of the $3.3 billion IPO, which valued India’s second-largest carmaker by sales at about $19 billion. Joanna Chen, an analyst at Bloomberg Intelligence, noted that its valuation was about five times its Korean parent’s, though in line with those of Indian peers such as Maruti Suzuki India Ltd.
Big Indian IPOs
Hyundai’s tepid debut stands out given that new listings in India have seen shares rise by an average of 39% in their first day this year, according to data compiled by Bloomberg.
That said, its performance also lent more credence to one longer-term trend: large Indian IPOs seldom do well on their first day. State-run Life Insurance Corp. of India saw its shares drop almost 8% in May 2022 after what was then a record IPO in local currency terms. Similarly, One 97 Communications Ltd., the operator of digital-payments provider Paytm, witnessed a stock slump of more than 25% on its debut in November 2021.