Hyundai Motor India IPO: Public Issue Subscribed 2.37x On Final Day Led By QIB Segment; GMP Drops

The initial public offering (IPO) of Hyundai Motor India Ltd. (HMIL) has been fully subscribed, closing on a high note on the final day of bidding, October 17, 2024. The Rs 27,870 crore issue, which had opened for public subscription on October 15, has now become India's largest-ever IPO, surpassing the record previously held by Life Insurance Corporation of India's (LIC) Rs 21,000 crore share sale.

Record Subscription on Final Day

The IPO received a strong response from investors on the last day of the bidding process. According to data, investors placed bids for 23.63 crore shares, well above the 9.97 crore shares that were on offer. The IPO saw a subscription rate of 2.37 times by the time bidding closed. This marks a dramatic uptick from the 42% subscription level recorded at the end of Day 2.

The retail investors' portion was subscribed at 50%, showing steady interest from small investors. Meanwhile, non-institutional investors (NIIs), often referred to as high-net-worth individuals (HNIs), subscribed to 60% of their allotted quota by Day 3. However, the most significant demand came from qualified institutional buyers (QIBs), whose portion was oversubscribed 6.97 times by the end of the subscription window.

Additionally, Hyundai's employees also showed enthusiasm for the IPO. The employee quota, which featured a special discount of Rs 186 per share, saw a subscription rate of 1.74 times, further contributing to the overall success of the offering.

IPO Structure and Pricing

Hyundai Motor India offered its shares in a fixed price band of Rs 1,865-1,960 per share. The IPO was entirely composed of an offer for sale (OFS), which means that the company itself will not receive any proceeds from the issue. Instead, the parent company, Hyundai Motor Global, will sell 14.2 crore shares as part of the offering.

Despite being structured as an OFS, the IPO has attracted attention due to Hyundai's strong financials and its position in the Indian market. Hyundai Motor India is the second-largest original equipment manufacturer (OEM) in the country and the second-largest exporter of passenger vehicles. The company holds a domestic market share of 14.6%.

Mixed Signals from the Grey Market

While the IPO garnered significant investor interest, the grey market premium (GMP) for Hyundai Motor India's shares told a different story. As of Thursday, the GMP had fallen sharply to Rs 14, indicating a negligible premium of just 0.71% over the upper price band of the IPO. The grey market premium had been declining steadily since the issue was first announced, with a drop of nearly 80% during the three-day bidding period.

The muted GMP suggests that investors are cautious about the stock's potential listing gains, particularly given the volatile market conditions and the weakened outlook for the auto sector. However, it is important to note that grey market trends do not always reflect the actual performance of the stock once it is listed. Analysts are optimistic about Hyundai's long-term growth prospects, and many have given a 'Subscribe' rating to the issue despite the tepid GMP.

Hyundai's Performance and Market Sentiment

Hyundai Motor India's recent sales figures have painted a mixed picture. In September 2024, the company sold 64,201 units, which marked a 10% year-on-year decline. For the year 2024 so far, the automaker has sold 5.77 lakh units, a flat growth compared to the previous year.

Market volatility also impacted investor sentiment during the IPO bidding period. On Thursday, heavy selloffs in the broader market, particularly in auto stocks, added to the uncertainty. However, analysts remain confident that Hyundai's strong SUV lineup and steady financials will help the company navigate the challenges and deliver long-term returns to investors.

Allotment and Listing Dates

The share allotment for the Hyundai Motor India IPO is set to be finalized on October 18, 2024. Investors who participated in the IPO will be able to check the status of their allotment via the registrar, Kfin Technologies Ltd. Once the allotment is complete, the shares will be listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE), with a tentative listing date scheduled for October 22, 2024.