Hyundai Motor India IPO subscribed 18% on Day 1 so far; details here

The initial public offering (IPO) of Hyundai Motor India Ltd (HMIL) saw a muted response from investors during the first day (Day 1) of bidding process. On Tuesday, the portion for employees was subscribed to the tune of 80 per cent and the retail investors' pack was booked 26 per cent.

The categories kept for non-institutional investors (NIIs) and qualified institutional buyers (QIBs) saw 13 per cent and 5 per cent bids, respectively. The issue received 1,78,10,310 bids against 9,97,69,810 shares on offer with an overall subscription of 18 per cent.

Chennai-based Hyundai Motor India is selling its shares in the range of Rs 1,865-1,960 apiece and the offer is open till Thursday, October 17. Investors can apply for a minimum of 7 equity shares and in multiples thereafter.

The automaker aims to raise Rs 27,856 crore via the initial share sale, making it the largest-ever IPO in Indian markets. It is entirely an offer-for-sale (OFS) by its South Korean parent Hyundai Motor Company.

Hyundai Motor India is a part of South Korea's Hyundai Motor Group, which is the third largest auto original equipment manufacturer (OEM) in the world based on passenger vehicle sales. It manufactures and sells four-wheeler passenger vehicles, including models such as sedans, hatchbacks, SUVs, and electric vehicles (EVs).

Ahead of its IPO, the company raised Rs 8,315.3 crore from anchor investors.

Grey market premium (GMP)

In the grey market, Hyundai Motor shares were last seen trading at a premium of 3.01 per cent against its issue price of Rs 1,960 (upper price band). The stock is likely to be listed on October 22.

A majority of brokerages have given a 'Subscribe' call for this IPO but only with a long-term view. "In the past two years, the PV (passenger vehicle) market experienced significant growth, but recently demand has slowed. Inventory levels at showrooms have risen from 28 days to 70 days, indicating a potential imbalance between supply and demand. The upcoming festive season will be the key monitorable for gauging the sustained expansion of the domestic PV market," Choice Broking said.

"At the higher price range, HMIL is seeking a P/E ratio of 25.6x, which is in line with its peer average. Thus the issue is fully priced. Historically, the company has reported profitable business growth and is consistently paying dividends. Further, with capacity expansion, new PV launches and a focus on premiumization, the company is well-placed to benefit in the long term. Thus considering the above observations, we assign a 'Subscribe for Long Term' rating for the issue," the brokerage also stated.