Hyundai IPO listing: India's biggest ever IPO lists lower than issue price, brokerages issue buy rating
Oct 22, 2024, 13:27 IST
Hyundai Motors India's IPO witnessed a muted debut on the bourses today. The share of the Indian subsidiary of South Korean automobile behemoth is listed at Rs 1,934 on the NSE, at a discount of 1.33% to its issue price of Rs 1,960. On the other hand, the share is listed at a discount of 1.48% to the issue price on the BSE.
The IPO, touted to be India's biggest ever, was entirely an OFS (offer for sale) worth Rs 27,870.16 crore and had set a price band of Rs 1,865 to Rs 1,960. As of 10:45 am today, the share was trading at Rs 1,907 on the NSE. On the BSE, the share was also trading at Rs 1,906, down by around 2.72%.
The stock debuted on NSE at a price of Rs 1,934, before briefly inching up to its intra-day high of Rs 1,970. As of 10:50 am, the stock's intra-day low stands at Rs 1,844.65.
With a market cap of Rs 1,51,376.41 crore, Hyundai Motors India (HMI) had opened for subscription between October 15th and 17th, 2024. Post this, the promoter's shareholding in the company has come down to 82.5%. The issue saw muted participation from retail investors, who subscribed 0.5x times to the IPO. However, QIBs (qualified institutional buyers) had oversubscribed nearly 700% to the IPO.
The company's GMP (grey market premium) in the unofficial markets, as of this morning, was at Rs 48, which translates to the markets anticipating a potential listing gain of 2.45% per share. However, with a discounted listing, the stock continues to extend losses.
Most automakers have forecast muted sales growth for the upcoming quarter as well, which has further dampened investor sentiment in this space. Even Hyundai had reported an 8% decrease in domestic PV dispatches made in August 2024, compared to the year-ago period.
Brokerage firm Motilal Oswal initiated coverage on Hyundai Motors India with a "buy" tag. It noted that Hyundai has a robust, well-established PV ecosystem in India to its advantage, apart from having strong backing from the parent company.
"We hence assign a 27x one-year FWD multiple to HMI, relative to our target multiple of 26x currently assigned to Maruti Suzuki. Therefore, we arrive at our target price of Rs 2,345 for Hyundai Motors India, based on 27x Sep’26E earnings. We initiate coverage on Hyundai Motors India with a buy rating," the broking added.
Macquarie also initiated coverage of Hyundai Motor India at a target price of Rs 2,235, implying a 14% upside to the issue price. Per the firm, "HMIL deserves to trade at a premium PE multiple versus peers due to its favorable portfolio mix and premium positioning."
As research firm Master Capital Services Ltd notes, with an improved market share in key segments due to a favorable product mix, the brand has the potential for further growth. "Investors with a long-term perspective could consider holding the stock, as future performance will most likely be driven by the company's competitive market position and product enhancements," it explained.
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The IPO, touted to be India's biggest ever, was entirely an OFS (offer for sale) worth Rs 27,870.16 crore and had set a price band of Rs 1,865 to Rs 1,960. As of 10:45 am today, the share was trading at Rs 1,907 on the NSE. On the BSE, the share was also trading at Rs 1,906, down by around 2.72%.
The stock debuted on NSE at a price of Rs 1,934, before briefly inching up to its intra-day high of Rs 1,970. As of 10:50 am, the stock's intra-day low stands at Rs 1,844.65.
With a market cap of Rs 1,51,376.41 crore, Hyundai Motors India (HMI) had opened for subscription between October 15th and 17th, 2024. Post this, the promoter's shareholding in the company has come down to 82.5%. The issue saw muted participation from retail investors, who subscribed 0.5x times to the IPO. However, QIBs (qualified institutional buyers) had oversubscribed nearly 700% to the IPO.
The company's GMP (grey market premium) in the unofficial markets, as of this morning, was at Rs 48, which translates to the markets anticipating a potential listing gain of 2.45% per share. However, with a discounted listing, the stock continues to extend losses.
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Brokerages initiate buy coverage
Experts are currently wary of the auto sector, given the ongoing slowdown in the passenger vehicle (PV) space, even as India approaches the festive season. Data from SIAM (Society of Indian Automobile Manufacturers) noted that during the first half of FY25, PV sales grew at a minimal 0.5%, much lower than the projected growth of 3-4%.Most automakers have forecast muted sales growth for the upcoming quarter as well, which has further dampened investor sentiment in this space. Even Hyundai had reported an 8% decrease in domestic PV dispatches made in August 2024, compared to the year-ago period.
Brokerage firm Motilal Oswal initiated coverage on Hyundai Motors India with a "buy" tag. It noted that Hyundai has a robust, well-established PV ecosystem in India to its advantage, apart from having strong backing from the parent company.
"We hence assign a 27x one-year FWD multiple to HMI, relative to our target multiple of 26x currently assigned to Maruti Suzuki. Therefore, we arrive at our target price of Rs 2,345 for Hyundai Motors India, based on 27x Sep’26E earnings. We initiate coverage on Hyundai Motors India with a buy rating," the broking added.
Macquarie also initiated coverage of Hyundai Motor India at a target price of Rs 2,235, implying a 14% upside to the issue price. Per the firm, "HMIL deserves to trade at a premium PE multiple versus peers due to its favorable portfolio mix and premium positioning."
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Nomura initiated coverage with buy rating and target price of Rs 2,472, based on FY27F EPS. "We estimate HMI to deliver about 8% volume CAGR over FY25-27F driven by 7-8 new models (including facelifts) and its EBITDA margins to improve to 14% by FY27F from 13.1% in FY24. We believe this will be led by improving mix, cost reduction and operating leverage. Overall, we estimate HMI to deliver about 17% earnings CAGR over FY25-27F," it added.As research firm Master Capital Services Ltd notes, with an improved market share in key segments due to a favorable product mix, the brand has the potential for further growth. "Investors with a long-term perspective could consider holding the stock, as future performance will most likely be driven by the company's competitive market position and product enhancements," it explained.