Hyundai’s ₹27,870 crore IPO last week was the largest ever in India’s primary market.
“Since the issue size was large, it took away the possibility of the share price seeing any scarcity premium on the listing day,” said Mrunmayee Jogalekar, auto research analyst at Asit C Mehta Investment Intermediates. “The lack of retail participation and the near-term concerns on the auto sector led to the tepid listing.”
The previous two large IPOs – Life Insurance Corp. (LIC) and One97 Communications (Paytm) – had seen weak listings.
The country’s second-largest car maker’s market capitalisation on Tuesday was ₹1.47 lakh crore. The market value of Maruti Suzuki, its larger peer, stood at ₹3.74 lakh crore.
Nomura initiated coverage on Hyundai with a buy rating and target price of ₹2,472, implying an upside of almost 35.8% over Tuesday’s closing price. Motilal Oswal Financial Services also assigned a ‘buy’ rating with a price target of ₹2,345 on the stock. Emkay has a ‘reduce’ rating with a price target of ₹1,750.Hyundai Motor India’s IPO was subscribed 2.37 times on the final day of bidding last week. The qualified institutional buyer (QIB) portion was subscribed 6.97 times, while only 60% and 50% of the non-institutional investor (NIIs) and the retail investors portions, respectively, were subscribed.”In the very near term, the upside is capped for Hyundai as markets and the auto sector are likely to be subdued,” said Jogalekar. “However, this could offer more buying opportunities for investors who can choose to have a buy-on-dips strategy for the long-term potential.”