Hyundai Motor India IPO GMP recoups before listing: What should you expect?

Shares of Hyundai Motor India are expected to make their debut on the bourses on October 22, 2024. Here's what the GMP trends suggest about the listing

Hyundai Motor India  IPO GMP rebounds: The grey market premium (GMP) of the unlisted shares of Hyundai Motor India has shown some signs of recovery ahead of their listing, scheduled for Tuesday, October 22, 2024. Sources tracking the grey market activities reveal that Hyundai Motor India shares are commanding a premium of Rs 75, which translates to a GMP of 3.83 per cent against the IPO issue price of Rs 1,960.  Notably, Hyundai Motor India IPO's today's GMP is Rs 105 higher, from the Rs 30 discount recorded on Friday, October 18, 2024, when the IPO share allotment was finalised, showing a significant rebound.

The public issue of Hyundai Motor India, which closed for public subscription on Thursday, October 17, 2024, was oversubscribed 2.37 times by the last date, driven largely by qualified institutional buyers (QIBs). They placed the highest bids, subscribing 6.97 times, according to NSE data.

Accoring to Prashanth Tapse, Senior VP (Research), Mehta Equities, "Despite being the second-largest player with a 14.6 per cent domestic market share in the passenger vehicle market, it received a sluggish response."
 

Tapse further highlighted that, although on a consolidated basis, the overall subscription figures look good, the majority 50 per cent of the offer size received a sluggish response from the Non-Institutional Investors (NII) and Retail Investors which got undersubscribed. However, on the final day of subscription, Qualified Institutional Buyers (QIB) gave a thumbs-up to the Hyundai Motor IPO offer, helping the offer to successfully sell out 100 per cent and above.

While the overall subscription figures look good on a consolidated basis, a majority—50 per cent of the offer size—received a sluggish response from Non-Institutional Investors (NII) and Retail Investors, resulting in undersubscription. On Day 3, Qualified Institutional Buyers (QIB) gave a thumbs up for the Hyundai Motor IPO offer, helping the offer sell out 100 per cent and above, Tapse highlighted.

Tapse believes the majority of investors, especially NIIs and retail, stayed back for a few reasons, such as concerns about high valuations compared to peers, followed by a 100 per cent offer-for-sale (OFS) component without any fresh issue, leaving nothing on the table for new investors to gain. There were also industry concerns about high inventory across the sector, slowing demand over the last 3-4 months, and a short-term trend that still looks dull and weak.

Meanwhile, if we take current GMP trends into consideration, Hyundai Motor India shares may list around Rs 2,035 (IPO issue price + Current GMP) on the bourses. That said, considering the sluggish undersubscription from NIIs and retail investors, along with market sentiments about overvaluation concerns, lower demand, and oversupply in the sector, Tapse thinks there is a high possibility of a flat to negative market debut.

"For allotted investors, one should not expect quick gains on listing day. Hence, we recommend HOLD, despite knowing the short-term volatility in the sector's demand and supply scenario," said Tapse.

For non-allottees, Tapse advised waiting and watching for the price to settle and revisiting the space when a better discounted opportunity arises, as Hyundai’s growth story remains intact for long-term investors, in line with India's growth.

Hyundai Motor India, part of the Hyundai Motor Group, is India's second-largest passenger vehicle manufacturer. Its portfolio comprises 13 models, with a strong focus on SUVs, catering to urban India's growing demand.