Hyundai Motor India IPO: Pubic Issue Sees Tepid Subscription Of 55% On Day 3; What Does GMP Hint?

The Hyundai Motor India IPO, which opened for subscription on October 15, 2024, is nearing its end today, October 17, with a lukewarm response from investors. Despite Hyundai Motor's strong presence in the Indian automobile market, the initial public offering (IPO) has struggled to gather momentum, and the outlook remains subdued based on its subscription status and grey market premium (GMP).

Tepid Subscription on Day 3

As of 12:18 om on the third and final day of bidding, the IPO has been subscribed just 55%, indicating sluggish demand across all investor categories. According to data from the Bombay Stock Exchange (BSE), the retail portion of the IPO has been subscribed to 43%, while the non-institutional investors (NII) portion is slightly lower at 33%. The only relatively stronger interest is seen in the qualified institutional buyers (QIB) category, which has managed a subscription rate of 91%.

The overall subscription rate reflects the tepid demand for the IPO, especially given the brand strength of Hyundai Motor in India. It remains to be seen whether a last-minute surge in interest on Day 3 will push the subscription figures up before the issue closes later today.

Hyundai Motor India IPO Grey Market Premium (GMP)

The grey market premium (GMP) for Hyundai Motor India shares has also declined significantly, dampening the anticipation of a blockbuster debut on the stock market. Currently, the GMP stands at Rs 17, which, when added to the IPO's upper price band of Rs 1,960, suggests a likely debut price of Rs 1,977 per share-a modest premium of 0.87%.

This is a sharp drop from the IPO's highest GMP of Rs 570, recorded in the days leading up to the issue opening. The decline in GMP hints that the stock may have a flattish debut on the bourses.

Hyundai Motor India IPO Details

The Hyundai Motor India IPO, with a price band of Rs 1,865 to Rs 1,960 per share, opened for subscription on Tuesday, October 15. The Rs 27,870.16 crore issue is entirely an offer for sale (OFS), where 14.22 crore shares are being sold by existing shareholders. There is no fresh issue component, meaning the proceeds from the IPO will not be used for business expansion or debt repayment but will go to the selling shareholders.

Hyundai Motor India is expected to finalize the share allotment on Friday, October 18. For those who successfully secure shares, the equity will be credited to their demat accounts by Monday, October 21, while those who do not get an allotment will receive refunds on the same day. The shares of Hyundai Motor India are set to list on the BSE and NSE on Tuesday, October 22, marking the company's debut on Indian stock exchanges.

Should You Apply?

Despite the weak subscription figures, many market experts and brokerage firms have recommended subscribing to the Hyundai Motor India IPO for long-term investment. Master Capital Service has highlighted the domestic passenger vehicle (PV) market's growth potential, with an expected compound annual growth rate (CAGR) of 4.5% to 6.5% based on India's GDP growth trajectory.

The brokerage also pointed to Hyundai's emphasis on electric vehicles (EVs) as a growth driver. Hyundai Motor India intends to capitalize on its deep understanding of Indian consumer preferences, further premiumizing its vehicle portfolio while focusing on EV market share expansion.

The company's focus on calibrated manufacturing capacity expansion and efficient capital allocation has also been flagged as key positives by analysts. Though the issue is considered fully priced, experts suggest long-term investors could benefit from Hyundai's sustained market leadership and ongoing strategic initiatives.