Hyundai Motor India’s IPO Listing on Tuesday: Current GMP Suggests Discounted or Flat Performance

As the share allotment for the Hyundai Motor India IPO has been finalized, all eyes are on its listing scheduled for October 22, 2024. Recent grey market data indicates that Hyundai Motor India’s shares are expected to debut at a discount or at the issue price on the stock exchanges.

IPO Overview: Subscription Details

Hyundai Motor India Ltd (HMIL), the Indian subsidiary of the South Korean automaker Hyundai, launched its initial public offering (IPO) from October 15 to October 17 for public subscription. The offering, valued at ₹27,870.2 crores, saw an impressive 2.37 times subscription overall. The IPO is a complete offer-for-sale (OFS), wherein Hyundai's South Korean parent company will dilute a portion of its stake. Bids for 23,63,26,818 shares were received against the 9,97,69,810 shares on offer.

The subscription was predominantly driven by the Qualified Institutional Buyers (QIB) category, which was oversubscribed by 6.97 times, significantly boosting the overall subscription numbers. However, the retail quota witnessed a mere 0.50 times subscription, while the Non-Institutional Investor (NII) quota garnered 0.60 times.

A Landmark IPO in Indian Market History

The Hyundai Motor India IPO marks a significant milestone in the Indian stock market, emerging as the largest IPO to date, comfortably surpassing the ₹21,000 crore IPO of LIC, which previously held the record. The price band for this much-anticipated IPO was set between ₹1,865 and ₹1,960 per share.

Latest Grey Market Premium (GMP)

Current market observations show that unlisted shares of Hyundai Motor India Ltd are trading only ₹5 above the issue price in the grey market. This ₹5 GMP translates to an anticipated 0.26% listing gain from the public issue. It’s essential to note that the GMP is subject to change based on market sentiments. On October 18, the GMP dipped to -₹32, indicating a potential negative listing.

The decline in GMP has been notable, falling from a peak of ₹175 on October 9 to just ₹5 on the final day of bidding. The GMP reflects investors' willingness to pay a premium over the issue price, a sentiment that appears muted as the listing date approaches.

How to Check Hyundai Motor India IPO Allotment Status

Once the IPO allotment process is complete, investors can check their allotment status through the following steps:

1. Visit the official BSE website at BSE India.

2. Select ‘Equity’ under ‘Issue Type’.

3. Choose ‘Hyundai Motor India Ltd’ from the drop-down menu under ‘Issue Name’.

4. Enter your application number or your Permanent Account Number (PAN).

5. Complete the CAPTCHA verification by clicking on ‘I am not a robot’ and then click ‘Search’.

Alternatively, investors can check their allotment status through the direct link provided by Link Intime India Pvt Ltd at KFintech.

Company Background and Operations

Hyundai Motor India began its operations in India in 1996 and currently offers 13 models across various segments. In its draft IPO papers, the company stated, “The listing of the Equity Shares will enhance our visibility and brand image and provide liquidity and a public market for the Equity Shares in India.”

Over the years, Hyundai has established itself as the second-largest carmaker in India, trailing behind Maruti Suzuki. With a market share of approximately 15%, Hyundai sold 614,721 cars domestically and exported 163,155 units in the fiscal year ending March 2024.

Manufacturing Capacity and Future Goals

Hyundai operates a manufacturing facility in Tamil Nadu, often referred to as the Detroit of Asia, with a production capacity of 824,000 units per year. Currently, the factory runs at a high utilization rate of 94%, limiting its ability to scale up production to compete more effectively with Maruti Suzuki.

To expand its production capabilities, Hyundai is set to acquire a former General Motors plant in Maharashtra, with plans to reach an annual production goal of 1 million units by the second half of the fiscal year ending March 2026.

Retail Presence and Popular Models

Hyundai boasts an extensive network of 1,377 dealerships across India, offering a range of popular models, including the Creta, Venue, and Grand i10 Nios hatchback. The company’s manufacturing plant also serves as a critical export hub, delivering vehicles to markets in South Africa, the Middle East, and Latin America.

Advisory and Legal Counsel

For this significant IPO transaction, Hyundai has engaged several investment banks, including Citi, HSBC Securities, JP Morgan, Kotak Mahindra Capital, and Morgan Stanley as advisors. Legal representation includes Shardul Amarchand Mangaldas as the company counsel, Cyril Amarchand Mangaldas for the banks, and Latham and Watkins acting as international counsel.