Hyundai’s IPO Struggles: Just 50% Retail Subscription, the Worst Among India’s Biggest Offerings

Retail investors largely shied away from Hyundai India’s IPO, resulting in just a 50% subscription rate, marking it as the weakest among the country’s five largest public offerings. Typically, retail investors eagerly jump on IPOs, but this time, interest was low.

Data from primedatabase.com shows that while retail subscriptions are usually strong, they fell short for Hyundai. In comparison, the second-largest IPO, LIC, had a retail subscription of 1.61 times. Paytm’s and Coal India’s public offerings saw subscriptions of 1.27 and 2.21 times, respectively.

Hyundai’s IPO, valued at ₹27,870 crore, managed to close with 2.37 times subscription on the final day, primarily driven by institutional investors. High pricing likely affected retail interest, as Hyundai was valued at a price-to-earnings ratio of 26 times its FY25 earnings, above the industry average of 24.41 times.

As trading begins on October 22, investors will be keen to see the appetite in the secondary market, though the grey market premium is currently nil. Analysts suggest that investors should consider the IPO for the long term, noting that there may not be quick gains.

This IPO is an offer for sale (OFS), meaning the proceeds will go entirely to the selling shareholder. Although all funds will benefit the parent company, management plans to invest in research and development and innovative products.

Hyundai stands as India’s second-largest carmaker, offering a range of 13 passenger vehicle models, including sedans, hatchbacks, and SUVs. The company aims to enhance its position as Hyundai Motor’s largest production hub in Asia, leveraging its two production facilities in Chennai, which have a total capacity of 824,000 units per year and are operating at over 90% capacity.

For the quarter ending June 2024, Hyundai reported revenue of ₹17,344 crore, up from ₹16,624 crore in the same quarter last year. The domestic market contributed 76% of this revenue, while exports accounted for 24%.