A Historical Context of Mega IPOs
The trend on Dalal Street indicates that most large IPOs fail to perform as expected, often resulting in disappointing returns for investors. Many mega issues have turned out to be wealth destroyers, getting listed at a discount. For example, recent notable IPOs such as Life Insurance Corporation of India (LIC) and One 97 Communications Ltd (Paytm) have experienced significant declines on their listing days.
Hyundai IPO 2024, According to Ace Equity data, five out of six IPOs that raised over ₹9,500 crore since 2010 have delivered negative returns on their listing days, with Coal India being the only exception. In this context, Hyundai’s IPO is particularly noteworthy as it aims to dwarf previous issues, such as LIC, which had an OFS (Offer for Sale) component that negatively impacted its market reception.
Understanding the Hyundai IPO Structure
Hyundai IPO 2024, will be entirely an OFS, offering up to 14,21,94,700 equity shares priced between ₹1,865 and ₹1,960 per share, with a minimum bid of seven shares. The valuation of HMIL is expected to reach ₹1.6 lakh crore upon completion of the offering, making it one of the largest IPOs in Indian history.
Market experts have expressed concerns over the IPO’s structure, especially given that both LIC and Paytm featured substantial OFS portions, resulting in negative investor sentiment.
Current Market Sentiment and Grey Market Premium
Despite the excitement surrounding Hyundai’s offering, the current market sentiment appears tepid, as reflected in the declining GMP, which recently fell to around ₹45 per share—implying a minimal listing pop of just 2%. This marks a significant drop from a starting GMP of ₹65 earlier in the day.
This diminishing GMP raises red flags for potential investors, as it suggests a lack of enthusiasm in the secondary market. The downturn comes amid broader market sentiments, indicating a saturation of liquidity, which may affect investor appetite for large IPOs like Hyundai’s.
Market Position and Future Prospects
Hyundai Motor India holds a significant position in the domestic passenger vehicle (PV) market, ranking as the second-largest player with a market share of approximately 14-15%. Despite its operational strengths, analysts at IIFL Securities have pointed out potential weaknesses in the PV industry in FY25. Moreover, they noted a portfolio gap in the Multi-Purpose Vehicle (MPV) segment, which Hyundai may need to address to remain competitive.
As Ashish Nand, President and Head of Digital Business at Kotak Securities, remarked, the current environment could lead to a better strike rate for retail investors due to the larger size of this offering. However, he emphasized caution, advising investors to evaluate and invest judiciously.
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Conclusion
Hyundai IPO 2024, Hyundai Motor India’s upcoming IPO represents a significant event in the Indian capital markets, but it faces challenges amid a history of tepid mega IPO listings. With falling grey market premiums and concerns over the OFS structure, potential investors may want to approach this offering with careful consideration. As the market watches closely, Hyundai’s IPO will test whether it can break the trend of disappointing large listings in India.
