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Imagine a bustling jewellery market teeming with diamonds and gold. Amidst this glittering chaos, a small stall is trying to sell handcrafted gemstones. Even as newer and shinier outlets keep cropping up, all vying for attention, this gemstone store offers some of the oldest yet valuable jewels at a discount. Though they lack immediate sparkle, these rare gems reveal their value to the discerning buyer. This is how South Korea appears for many experts in global capital markets: a trove of undervalued gems, overshadowed by brighter, more aggressively marketed investment options. This undervaluation, known as the "<keyword id="24399183" type="General" weightage="20" keywordseo="korean-discount" source="keywords">Korean Discount</keyword>," reflects how South Korean companies are priced much lower than their global peers despite robust fundamentals — strong financial performance and consistent profitability. Contributing factors are many, ranging from opaque governance structures to geopolitical risks. But the fact stays, if you are a seasoned conglomerate listed in South Korea, you are likely undervalued. <keyword id="19906087" type="General" weightage="20" keywordseo="hyundai" source="keywords">Hyundai</keyword> Motor India Ltd. (HMIL), a subsidiary of the Korean giant Hyundai Motor Company (HMC), recently sought to escape this valuation trap by listing in India, a market where investor optimism commands premium pricing. But its valuation raised many eyebrows! Now that a month and a half has gone by since its listing, time is apt to examine if this gamble paid off. Will <keyword id="93460" type="General" weightage="100" keywordseo="hyundai-india" source="Orion">Hyundai India</keyword> justify its high valuation? Or does the listing highlight broader questions about the overheated valuation dynamics of Indian markets? A record-breaking <keyword id="19898327" type="General" weightage="20" keywordseo="ipo" source="keywords">IPO</keyword> but questions remain Hyundai Motor India’s mega Initial Public Offering (IPO), launched in October 2024, broke records by raising ₹27,870 crore, making it India’s largest-ever IPO. The offer was oversubscribed by 2.37 times, highlighting robust demand. But many investors remained sceptical: was this IPO an honest attempt to expand Hyundai’s footprint in India or was it trying to offer a way to cashout for existing investors and promoters? Or perhaps, is it an attempt by the Korean chaebol — a large family-owned business conglomerate — to break free from the aforementioned “Korean Discount”? When shares listed on October 22, these concerns seemingly weighed on the minds of most investors and the stock promptly dipped 5% below the issue price on the day. A tepid grey market performance had already foreshadowed this muted debut in the Indian markets. Now, after almost 35 trading sessions on Indian market, the stock remains almost exactly at price it listed on October 22 at Rs 1820—no gain, no loss. <h3>The gamble of hyper-valuation</h3>Much of this hesitation stemmed from Hyundai’s valuation. On listing, Hyundai was valued at $18 billion, positioning it as one of India’s most valuable automotive companies. However, such high valuations often temper investor enthusiasm, resulting in more cautious short-term outcomes. For most investors, the Price-to-Earnings (P/E) ratio is the most preferred parameter to gauge if a company is overvalued or undervalued. With a P/E ratio of 26.3, HMIL was priced significantly above the Indian automotive industry average of 24.4. Globally, automotive companies operate with much lower P/E ratios, reflecting mature market conditions and slower growth trajectories. HMIL’s South Korean parent Hyundai Motor Company (HMC) trades at a meagre 3.07, believe it or not! For Indian investors, the high premium hinted at overvaluation despite Hyundai’s strong domestic position. Such stark difference in valuation obviously sparked debates — is the Indian market assigning a premium to Hyundai Motor India’s growth potential, or is it simply reflecting the general exuberance around the prospects of the Indian economy? Another concern is the allocation of IPO proceeds. Hyundai’s IPO was structured as an offer for sale (OFS), meaning all funds raised would flow to the parent company rather than Hyundai India’s operations. Although Hyundai has committed to investing in R&amp;D for EVs and hybrids, critics argue that the lack of immediate reinvestment in India’s operations reflects a missed opportunity for domestic growth. Despite the early disappointment, Hyundai was confident that the valuation was fair. It did have some factors going for it, in addition to the fact that other auto giants like Mahindra &amp; Mahindra and <keyword id="19909974" type="General" weightage="20" keywordseo="maruti-suzuki" source="keywords">Maruti Suzuki</keyword> command even higher P/E ratios. And looking at the company fundamentals, it does seem like Hyundai is playing a long-term game. <h3>Hyundai in India: A proven track record</h3>Despite the initial stumble, Hyundai India’s long-term story is compelling. Since entering the Indian market in 1996, the automaker has sold over 8 million vehicles and firmly occupies the second spot in the domestic passenger vehicle market, trailing only Maruti Suzuki. Hyundai’s blockbuster SUV offerings, like the Creta and Venue, have been critical in building this dominance. Despite some challenge from Maruti Suzuki Brezza and Tata Punch, Creta has retained the tag of ‘most-selling SUV in India’ successfully so far this year. <div type="image" title="Hyundai" agency="Business Insider India" msid="116156234" hostid="261" caption="&amp;lt;p&amp;gt;Selling over 17,000 units per month on average this year, Creta has edged past major competitors to be the most-selling SUV in India in 2024. As Indian consumers preference continues to shift gradually towards premium products over budget segments, Hyundai stands to benefit (Wikimedia Commons / Canva)&amp;lt;/p&amp;gt;"></div> Selling over 17,000 units per month on average, Creta has edged past major competitors to be the most-selling SUV in India in 2024. As Indian consumers preference continues to shift gradually towards premium products over budget segments, Hyundai stands to benefit (Wikimedia Commons / Canva) Hyundai India’s market share of 14% in October 2024 underscores its clout. The company’s ability to tap into India’s premiumisation trend, where consumers increasingly prefer high-end vehicles, positions it well for growth. With plans to expand in electric vehicles (EVs) and hybrid technology, Hyundai is poised to capitalise on both domestic demand and export opportunities. The company’s ability to capitalize on its strong brand, extensive dealer network, and leadership in segments like SUVs and exports will determine its future performance. Hyundai’s strategic focus on expanding electric vehicle production also aligns with global trends towards sustainability, potentially positioning it as a leader in the segment. By listing in India, Hyundai aims not only to expand its operations but also to make India a global manufacturing and export hub for its products, especially SUVs and EVs. Therefore, despite early setbacks, Hyundai’s gamble seems to have paid off. The stock has rebounded, gaining 5% in the past month. More good news came in this week, as positive projections from Morgan Stanley and JPMorgan forecast an impressive 17-28% upside for the stock over the next year, reflecting growing investor optimism. <h3>A strategic pivot from the Korean Discount?</h3>The Korean Discount has long plagued South Korea’s chaebols, including Hyundai. Experts attribute this to several factors: <ul> <li>Chaebol Governance: South Korea’s conglomerates, known as chaebols, are often criticised for opaque governance structures and excessive family control.</li> <li>Geopolitical Risks: Tensions with North Korea contribute to investor caution, adding a layer of perceived risk.</li> <li>Limited Domestic Liquidity: South Korea’s relatively small investor base can constrain market activity and valuation potential.</li> </ul> By listing in India, Hyundai sought to unlock better valuations for its subsidiary, leveraging the optimism of Indian markets. India’s stock market has a trailing P/E ratio of 24.4, far above South Korea’s Kospi average of 16-17. The Indian market’s appetite for high-growth stories provides a fertile ground for companies like Hyundai to escape the valuation constraints of their home market. A successful IPO could encourage other such conglomerates to follow suit, setting a precedent. While Hyundai India has a robust track record, its future success hinges on navigating key challenges: <ul> <li>Supply Chain Vulnerabilities: Hyundai relies heavily on its Chennai plant, making it vulnerable to disruptions.</li> <li>Intensifying Competition: Domestic rivals like <keyword id="19906967" type="General" weightage="20" keywordseo="tata-motors" source="keywords">Tata Motors</keyword> and MG Motors are making aggressive inroads into the EV market.</li> <li>Policy Risks: The automotive sector’s reliance on government incentives for EVs and hybrids adds a layer of unpredictability.</li> </ul> High valuations come with risks. Hyundai will need to prove that it can sustain its growth trajectory in India, fend off competition from established players like Maruti Suzuki and Tata Motors, and navigate challenges such as supply chain disruptions and regulatory hurdles. If Hyundai successfully capitalises on its strong brand and market leadership, it could not only redefine its value but also serve as a case study for other Korean companies seeking better recognition and valuations in global markets. <h3>Is Hyundai saga a reflection of overheated Indian markets?</h3>The bigger question here is, does Hyundai’s IPO highlights a broader narrative about Indian markets’ premium valuations? With a trailing P/E ratio of 24.4, Nifty 50 index is among the highest in emerging markets. India’s stock markets consistently command a premium due to robust retail participation, strong economic growth prospects, and a burgeoning middle class. While this premium reflects optimism about India’s long-term growth story, it also signals potential risks of overvaluation, particularly in sectors like technology, automotive, and consumer goods. With a record ₹94,017 crore outflow by Foreign Portfolio Investors (FPIs) in October 2024, concerns about overheated valuations are mounting. Sustaining such unprecedented valuations required companies to consistently perform above global averages, and retaining robust earnings growth quarter after quarter remains a challenge in today’s uncertain world. For Hyundai, the high valuation is both an opportunity and a risk. While it underscores investor confidence, it narrows the margin of safety, making the stock vulnerable to corrections during economic downturns. Take for example, the high-profile IPO of Life Insurance Corporation of India (LIC) that raised over ₹21,000 crore. Its listing was met with disappointment as the stock began trading at a 9% discount to its issue price, and subsequent performance has remained subdued. LIC’s post-IPO journey also highlights how inflated valuations can lead to long-term underperformance, as the stock gave only 12% return over the past 30 months when even the Nifty 50 index went up by over 44%. This happens when when the company's growth narrative fails to align with its pricing. Despite being a household name with a dominant market share, LIC's stock has struggled to meet expectations, partly due to concerns about its operating efficiency and the limited use of IPO proceeds for growth initiatives. Make no mistake, Hyundai Motor India’s IPO is a landmark event! It showcases the potential for Korean companies to leverage emerging markets like India for better valuations. It also shows that strong fundamentals can help justify a company such premium valuations even amidst bearish economic prospects. However, it also serves as a cautionary tale about the risks of overvaluation. For Hyundai, the next steps involve proving its long-term growth story, navigating competitive challenges, and maintaining investor confidence. For Indian markets, Hyundai’s IPO underscores the need to balance optimism with realistic expectations as they continue to evolve as global investment hotspots. To sustain the country’s economic narrative as a land of unmatched opportunities, corporate India must work on improving long-term fundamentals and mitigating long-term risks. As global investors watch closely, Hyundai India’s success or failure could shape how international companies view India as a listing destination in the years to come.

Tackling the 'Korean Discount': A deep dive into curious case of Hyundai Motor India's market listing

<ul><li>Shares of <keyword id="10019460" type="General" weightage="20" keywordseo="sigachi-industries" source="Orion">Sigachi Industries</keyword> list at ₹575 while the shares were allotted at ₹163 per share.</li><li>The IPO was subscribed 101.91 times on the last day of the bidding.</li><li>The market capitalisation of the company stood at ₹1,856 crore. </li></ul>Shares of Sigachi Industries made a strong listing on the National Stock Exchange (NSE) and BSE at 252% premium over the issue price of ₹163 apiece. Post listing, the market capitalisation of the company stood at ₹1,856 crore, according to BSE data. The shares of Sigachi Industries were trading at ₹603, higher by 270% at 10.08 a.m., on November 15. The grey market showed a strong listing for Sigachi Industries a day prior to the listing with a ₹220 premium per share. Moreover, the IPO ⁠— open between November 1 and November 3 ⁠— was a hit among investors. It was subscribed 101.91 times on the last day of the bidding. The company is engaged in the manufacturing of microcrystalline cellulose, the polymer that is widely used for finished dosages in the pharmaceutical industry. The company was looking to raise ₹125.43 crore by selling 76.95 lakh shares through the IPO with a price band of ₹161 to ₹163 per share. The proceeds from the issue will be used for expansion of production facilities of MCC at Dahej and Jhagadia in Gujarat. It operates through three manufacturing units in Hyderabad and Jhagadia, Dahej located in Gujarat. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/startups/news/paytm-ipos-allotment-status-would-be-announced-tomorrow-heres-how-you-can-check-allotment-status/articleshow/87670547.cms">Paytm IPO’s allotment status would be announced today— here’s how you can check allotment status</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/news/policybazaar-sigachi-industries-sjs-enterprises-ipo-will-list-on-15-november/articleshow/87669292.cms">Policybazaar, Sigachi Industries, SJS Enterprises IPO will get listed tomorrow</a>

Sigachi Industries more than triples money for IPO investors on listing

<ul><li>The Hyderabad-based manufacturer of cellulose-based excipients, <keyword id="10019460" type="General" weightage="20" keywordseo="sigachi-industries" source="Orion">Sigachi Industries</keyword>, is looking to raise ₹125.43 crore.</li><li>Analysts believe the company’s consistency in paying a dividend continuously for the last three years bodes well.</li><li>You can easily apply to the IPOs via mobile applications of new age investment platforms like Zerodha, Paytm, Upstox and others.</li></ul>Today (November 3) is the last day to subscribe to the initial public offering (IPO) of Hyderabad-based manufacturer of cellulose-based excipients, Sigachi Industries. So far in the first two days of the IPO bidding process, it has already been subscribed over 22.133 times. Shares reserved for retail investors have been oversubscribed by 37.14 times on the second day of the IPO bidding process. Strong demand in subscription for the IPO is also because the shares of the company commanded a strong premium of ₹160 in the grey market today. The grey market premium rose to ₹160 per share on Tuesday from ₹150 earlier. You can easily apply to the IPOs via mobile applications of new age investment platforms like Zerodha, Paytm, Upstox and others. The company is looking to raise ₹125.43 crore through the IPO with a price band of ₹161 to ₹163 per share. It is engaged in the manufacturing of microcrystalline cellulose, the polymer that is widely used for finished dosages in the pharmaceutical industry. “With over 30 years of continuous growth, three multi-locational manufacturing facilities and consistent focus on delivering premium quality products, the company is one of the leading manufacturers of cellulose based excipients in India, in terms of volume,” said a report by JM Financial. Net profit of the chemical manufacturer has been increasing steadily over the past three financial years. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/news/bharti-airtel-records-13-rise-in-its-second-quarter-of-the-current-fiscal-year/articleshow/87489938.cms">Bharti Airtel records 13% rise in its second quarter of the current fiscal year</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/startups/news/ipo-bound-delhiverys-top-executives-will-get-up-to-12-crore-appraisal/articleshow/87489872.cms">IPO-bound Delhivery’s top executives are set to get an appraisal of up to ₹12 crore soon</a>

Last day to subscribe to Sigachi Industries’ IPO; grey market premium at ₹160

<ul><li>The Hyderabad-based manufacturer of cellulose-based excipients, Sigachi Industries, is looking to raise ₹125.43 crore.</li><li>Analysts believe the company’s consistency in paying a dividend continuously for the last three years bodes well.</li><li>The grey market premium of the company shares have risen to ₹160 per share from ₹150 earlier.</li><li>Overall, the IPO received bids for 4.94 crore as against 53.86 lakh shares offered for sale.</li></ul>The Hyderabad-based manufacturer of cellulose-based excipients, Sigachi Industries, has already been subscribed over 9 times on the second day of the initial public offering (IPO). Shares reserved for retail investors have been oversubscribed by 17.21 times on the second day of the IPO bidding process as of 1:38 p.m., on November 2. Overall, the IPO received bids for 4.94 crore as against 53.86 lakh shares offered for sale. Investors are excited about the IPO also because the shares of the company commanded a strong premium of ₹160 in the grey market today. The grey market premium rose to ₹160 per share on Tuesday from ₹150 earlier. The company is looking to raise ₹125.43 crore through the IPO with a price band of ₹161 to ₹163 per share. It is engaged in the manufacturing of microcrystalline cellulose, the polymer that is widely used for finished dosages in the pharmaceutical industry. “With over 30 years of continuous growth, three multi-locational manufacturing facilities and consistent focus on delivering premium quality products, the company is one of the leading manufacturers of cellulose based excipients in India, in terms of volume,” said a report by JM Financial. Brokerage firm Reliance Securities <a href="https://economictimes.indiatimes.com/markets/ipos/fpos/sigachi-industries-ipo-subscribed-11-8-times-so-far-on-day-2/articleshow/87481993.cms">reportedly</a> said, “Sustained demand for microcrystalline cellulose (MCC) from various industries and the expansion programme, earnings growth momentum looks sustainable. It has been paying a dividend consistently for the last three years, which bodes well.” Meanwhile analysts at Marwadi Shares and Finance <a href="https://economictimes.indiatimes.com/markets/ipos/fpos/sigachi-industries-ipo-subscribed-11-8-times-so-far-on-day-2/articleshow/87481993.cms">reportedly</a> said that, "The company is one of the leading manufacturers of MCC [cellulose-based excipient] in India with a presence across diverse industry verticals and is available at reasonable valuation on an absolute basis." Sigachi Industries operates through three manufacturing units in Hyderabad and Jhagadia, Dahej located in Gujarat. The proceeds from the issue will be used for expansion of production facilities of MCC at Dahej and Jhagadia in Gujarat. Net profit of the chemical manufacturer has been increasing steadily over the past three financial years. <table style="border-width: initial; border-style: none;"></colgroup><tbody><tr><td style="border-left:solid #000000 0.8333325pt;border-right:solid #000000 0.8333325pt;border-bottom:solid #000000 0.8333325pt;border-top:solid #000000 0.8333325pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">Particulars </td><td style="border-left:solid #000000 0.8333325pt;border-right:solid #000000 0.8333325pt;border-bottom:solid #000000 0.8333325pt;border-top:solid #000000 0.8333325pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">Revenue </td><td style="border-left:solid #000000 0.8333325pt;border-right:solid #000000 0.8333325pt;border-bottom:solid #000000 0.8333325pt;border-top:solid #000000 0.8333325pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">Profit </td></tr><tr><td style="border-left:solid #000000 0.8333325pt;border-right:solid #000000 0.8333325pt;border-bottom:solid #000000 0.8333325pt;border-top:solid #000000 0.8333325pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">FY21 </td><td style="border-left:solid #000000 0.8333325pt;border-right:solid #000000 0.8333325pt;border-bottom:solid #000000 0.8333325pt;border-top:solid #000000 0.8333325pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">₹255 crore </td><td style="border-left:solid #000000 0.8333325pt;border-right:solid #000000 0.8333325pt;border-bottom:solid #000000 0.8333325pt;border-top:solid #000000 0.8333325pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">₹47 crore </td></tr><tr><td style="border-left:solid #000000 0.8333325pt;border-right:solid #000000 0.8333325pt;border-bottom:solid #000000 0.8333325pt;border-top:solid #000000 0.8333325pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">FY20 </td><td style="border-left:solid #000000 0.8333325pt;border-right:solid #000000 0.8333325pt;border-bottom:solid #000000 0.8333325pt;border-top:solid #000000 0.8333325pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">₹221 crore </td><td style="border-left:solid #000000 0.8333325pt;border-right:solid #000000 0.8333325pt;border-bottom:solid #000000 0.8333325pt;border-top:solid #000000 0.8333325pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">₹41 crore </td></tr><tr><td style="border-left:solid #000000 0.8333325pt;border-right:solid #000000 0.8333325pt;border-bottom:solid #000000 0.8333325pt;border-top:solid #000000 0.8333325pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">FY19 </td><td style="border-left:solid #000000 0.8333325pt;border-right:solid #000000 0.8333325pt;border-bottom:solid #000000 0.8333325pt;border-top:solid #000000 0.8333325pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">₹240 crore </td><td style="border-left:solid #000000 0.8333325pt;border-right:solid #000000 0.8333325pt;border-bottom:solid #000000 0.8333325pt;border-top:solid #000000 0.8333325pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">₹37 crore </td></tr></tbody></table> SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/finance/banks/news/former-sbi-chairman-pratip-chaudhuris-arrest-will-lead-to-policy-paralysis-say-experts/articleshow/87482347.cms">The arrest of former SBI chief Pratip Chaudhuri may prevent bankers from making any risky decisions, say experts</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/startups/news/logistics-startup-delhivery-files-for-a-nearly-1-billion-ipo/articleshow/87481889.cms">Logistics startup Delhivery files for a nearly $1 billion IPO</a>

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Tackling the 'Korean Discount': A deep dive into curious case of Hyundai Motor India's market listing

Deekshith Pinto

Sigachi Industries more than triples money for IPO investors on listing

Bhakti Makwana

Last day to subscribe to Sigachi Industries’ IPO; grey market premium at ₹160

Bhakti Makwana

Sigachi Industries IPO — Grey market premium rises to ₹160, here’s what analysts are saying about it

Bhakti Makwana

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