Hyundai Motor India Ltd.’s initial public offering (IPO), the largest ever in India, has seen a lukewarm response, with only 42% of the shares subscribed two days before its closing on Thursday. The offering, which involves selling a 17.5% stake in the company, could value Hyundai Motor India at approximately $19 billion. However, weak demand and lackluster grey market trading have tempered expectations for the stock’s debut.
The IPO’s sluggish performance reflects the broader downturn in Indian equities, as investors shift their focus towards economic developments in China. Despite initial excitement due to India’s recent dominance in the IPO market, Hyundai’s offer has so far underwhelmed, with 58% subscription from institutional investors and only 38% from retail investors. According to Indian regulations, at least 90% subscription is required for an IPO to proceed.
Analysts remain cautiously optimistic about a last-minute surge in subscriptions, as major IPOs in India often see retail investors following institutional moves on the final day. Astha Jain, an analyst at Hem Securities, noted that the IPO’s high valuation might be discouraging retail traders seeking short-term profits.
Before the public offering opened, Hyundai raised ₹83.2 billion ($990 million) from anchor investors, including BlackRock Inc. and Baillie Gifford, with shares priced at ₹1,960 each, the top end of the range. This advance funding suggests confidence from large investors, although retail participation remains crucial for the IPO’s success.
The success of Hyundai’s IPO is significant as it could boost India’s 2024 fundraising totals to more than $12 billion, surpassing the previous two years. However, this figure would still fall short of the $17.8 billion raised during the IPO boom in 2021. Other high-profile IPOs, such as Swiggy Ltd. and NTPC Ltd.’s renewable energy division, are expected to launch soon, adding to the competitive landscape.
The shares from Hyundai’s IPO are set to begin trading on October 22. If successful, the listing of India’s second-largest automaker by sales will further solidify the country’s position as a leading IPO market. However, a failure to meet the minimum subscription threshold could derail the offering, reflecting both valuation concerns and investor caution amid volatile market conditions.
Despite the slow start, analysts believe the IPO could still gain momentum on the final day as retail and institutional investors finalize their bids. Hyundai’s performance will be closely monitored, as its outcome could influence the trajectory of upcoming IPOs in India and investor sentiment in the broader stock market.