The INR 27,870 crore issue opens on Tuesday and closes on Thursday. The grey market premium for Hyundai shares was at INR 370 on October 4.Investors looking to put money in Hyundai Motor India’s mega initial public offering (IPO) — the country’s largest ever — must be willing to hold the stock for at least a year to earn healthy returns. Analysts are not expecting a bumper listing by the country’s second-largest car maker, with trends in the grey market pointing to a moderate opening.
The grey market premium — the price over the IPO price in the unofficial market that investors pay for the shares before listing — for Hyundai was at INR 30 on Monday evening or 1.5% above the upper end of the issue price band of INR 1,865 to INR 1,960. The INR 27,870 crore issue opens on Tuesday and closes on Thursday. The grey market premium for Hyundai shares was at INR 370 on October 4.
“The grey market premium has declined in recent weeks due to heightened market volatility and dampening demand,” said Krishna Appala, senior research analyst at Capitalmind Research. “In the short term, Hyundai may face limited growth prospects as increased competition continues to erode market share.”
Analysts said the issue pricing does not leave a lot of room for a strong listing, as seen in other recent issues like Bajaj Housing Finance and Ola Electric Mobility. This makes the stock a better bet for investors willing to hold for at least a year.
“Although the issue appears fully priced, Hyundai is strategically positioned for substantial growth following its current expansion efforts, which may provide value in the long run,” said analysts at Bajaj Broking Research. “We recommend investors consider holding their shares for the long term, ideally 1-3 years, to maximise potential rewards.”
Shashank Kanodia, assistant vice president of research at ICICI Direct, said that if held for over a year, the stock’s returns could be in “double digits”. “The company has a decent share of SUV (Sports Utility Vehicle) sales, which comprise 63% of its PV (Passenger Vehicles) sales domestically as of FY24 versus the industry share of 60% with leading market share in mid-SUV space.”
Investors could also consider waiting for the listing day, said some analysts. “Since it’s a large issue, there would be many sellers on the listing day, and the shares could be available at lower prices,” said Aniruddha Sarkar, CIO, Quest Investment Advisors.
