Hyundai Motor India IPO Day 3: Subscription soars 2.28x; QIBs drive demand

The pubclic issue of Hyundai Motor India, which enjoys the second-largest share of the country's passenger vehicle market, is the largest offering in India since LIC went public with a Rs 21,000 crore

Hyundai Motor India IPO subscription status: The initial public offering (IPO) of Hyundai Motor India has succeeded in gaining traction on the final day of bidding, as the issue received bids for 22,70,16,055 shares against the 9,97,69,810 shares offered, translating to an oversubscription of 2.28 times. This demand was driven by Qualified Institutional Buyers (QIBs), who bid for 6.76 times the shares offered till around 3:03 PM on Thursday.

Meanwhile, Retail Individual Investors (RIIs) have subscribed 0.47 times, while Non-Institutional Investors (NIIs) have subscribed 0.53 times of the public issue, according to NSE data. Additionally, the quota reserved for employees has also been fully subscribed at 1.67 times.

Shivani Nyati, Head of Wealth at Swastika Investmart, said, "Market participants were cautious about the possibility of the IPO being cancelled or withdrawn due to undersubscription."

According to SEBI rules, if an IPO fails to reach at least 90 per cent subscription, the issue is cancelled, and the company must refund the entire subscription amount to investors. If subscription exceeds 90 per cent but remains incomplete, soft underwriting occurs, where underwriters agree to purchase the remaining shares after the issue closes.

Fortunately, none of these measures were required, as the Hyundai IPO secured full subscription before the end of Day 3, the last day of the offering, Nyati noted. The Hyundai IPO's size and fully priced valuation were key factors behind the slow initial response, as many investors, especially those seeking listing gains, were hesitant, Nyati explained. "While the IPO is now fully subscribed, it's currently trading at a discount in the grey market, indicating that investors may get allotment easily but should temper expectations for significant listing gains."

That said, the grey market premium (GMP) of the unlisted shares of the South Korean automaker's Indian arm continues to decline, falling below 1 per cent on Thursday. The company's shares were trading at a premium of around Rs 14 against the upper end of the IPO price of Rs 1,960, reflecting a GMP of 0.71 per cent. Hyundai Motor IPO’s GMP today is lower than the Rs 45 recorded yesterday when the issue opened for subscription. However, the GMP is significantly lower than the Rs 147 recorded on October 9, when Hyundai Motor announced its price band, according to sources tracking grey market activities.

Hyundai Motor India has launched its IPO, the first by a carmaker in India since Maruti Suzuki’s listing in 2003. This IPO also marks Hyundai Motor’s first stock market debut outside South Korea. Furthermore, the IPO of Hyundai Motor India, which enjoys the second-largest share of the country’s passenger vehicle market, is the largest offering in India since Life Insurance Corporation of India (LIC) went public with a Rs 21,000 crore IPO.

With the IPO, Hyundai Korea is offloading 14,21,94,700 shares of face value Rs 10 apiece as an offer for sale. The Hyundai Motor India IPO is available for public subscription at a price band of Rs 1,865-1,960, with a lot size of 7 shares. Accordingly, investors can bid for a minimum of 7 shares and in multiples thereof.

The Hyundai Motor India IPO, which opened for public subscription on October 15, 2024, will conclude today. Following the closure of the IPO subscription, the basis of allotment of Hyundai Motor India shares will tentatively be finalised on Friday, October 18, 2024. The shares are expected to be credited to demat accounts on Monday, October 21, 2024.

Hyundai Motor India shares are likely to make their debut on the bourses on Tuesday, October 22, 2024, by listing on BSE and NSE.