Hyundai GMP Drops 3% Below IPO Price: Negative Listing on D-Street Expected

Hyundai Motor India’s IPO is showing signs of a weak demand as its grey market premium (GMP) dropped to ₹1,903, which is 3% below the issue price of ₹1,960. This suggests that the stock could have a disappointing debut when it lists on the stock exchanges on October 22. The share allotment will be finalized today.

The grey market premium (GMP) is a reflection of how the stock is performing in the unlisted market, but it can change quickly and isn’t a guarantee of how the stock will behave once it’s officially listed.

Hyundai’s IPO, which is worth ₹27,870 crore and the largest public offering in India’s history, faced a tough time in the bidding process. The issue was saved by strong demand from non-institutional investors, while retail and non-institutional categories remained under-subscribed.

Despite this, many analysts are still confident about the company’s long-term potential in India’s growing passenger vehicle market, which is seeing a shift toward bigger and more premium cars. At least 10 analysts have advised investors to subscribe to the IPO for long-term gains.

However, the company’s premium price-to-earnings (P/E) ratio of 26 times its projected FY25 earnings might not appeal to short-term investors, especially given the current GMP and high valuation.

Hyundai has a strong reputation in the Indian market, known for its reliable after-sales services and competitive pricing. With support from its parent company in Korea and a highly automated factory in Chennai, Hyundai has managed to keep its costs low while expanding its network across India. The company also aims to increase its presence in the electric vehicle (EV) market over time.

“We believe the company is well-positioned to capitalize on the growing passenger vehicle market in India. We recommend subscribing to the IPO for the long term,” said Arihant Capital.

The entire IPO was an offer for sale (OFS) of 14.2 crore shares, with all proceeds going to Hyundai Motor Global, the parent company. Although the funds will go to the parent company, Hyundai’s management stated that they will be used for research, development, and new product innovations.