New Delhi – Hyundai Motor India made its much-anticipated debut on the Indian stock exchanges on Tuesday, but the performance of its shares fell short of expectations, dropping nearly 5% after a record-setting initial public offering (IPO) that raised an unprecedented $3.3 billion.
On its first day of trading, Hyundai Motor India’s shares were priced at 1,874 rupees on the Bombay Stock Exchange (BSE), marking a decline from its IPO issue price of 1,960 rupees. The fall came despite the high anticipation around the listing, which was widely regarded as one of the most significant financial events in India’s IPO market in recent years.
The company had offered a total of 142.19 million shares at a price range of 1,865 rupees ($22.18) to 1,960 rupees, successfully raising 278.56 billion rupees ($3.3 billion). This offering became the largest IPO in India’s history in terms of the amount of capital raised, further solidifying Hyundai Motor India’s importance not only in the domestic auto industry but also in the broader economic landscape.
The IPO, which opened on October 15 and closed on October 17, was oversubscribed more than two times, signaling strong investor interest. According to Reuters, the demand for the shares was driven by both retail and institutional investors, attracted by the automaker’s strong presence in the Indian market and its reputation as a reliable subsidiary of the South Korean giant, Hyundai Motor Company.
The First IPO for a Hyundai Subsidiary Outside South Korea
This IPO marked a historic first for Hyundai Motor, as it was the company’s first public offering outside of its home country, South Korea. Unlike a traditional IPO, in which a company sells fresh shares to raise capital for business expansion or other purposes, Hyundai Motor India’s IPO was structured as an Offer for Sale (OFS). In this arrangement, the parent company, Hyundai Motor Company, sold its existing shares to investors, thereby offering a unique opportunity for investors to buy into a globally recognized brand.
Despite the initial drop in share prices, market analysts have maintained a cautiously optimistic outlook for the long-term prospects of Hyundai Motor India on the stock exchanges. The company’s shares are now being traded on the National Stock Exchange (NSE) in New Delhi and the Bombay Stock Exchange (BSE) in Mumbai, providing greater liquidity and accessibility to a wide range of investors.
Lead Bookrunners and the Indian IPO Market
The Hyundai Motor India IPO was managed by a consortium of major financial institutions and investment banks, including Kotak Mahindra Capital, Citigroup Global Markets India, HSBC Securities and Capital Markets (India), J.P. Morgan India, and Morgan Stanley India. These institutions played a key role in managing the complex and large-scale public offering, ensuring that the process was seamless and attracted substantial investor participation.
Earlier this year, market experts expressed high confidence in the growth of the Indian IPO market. In June, analysts highlighted that 2024 could be a “record-breaking year” for India in terms of IPO activity, with several high-profile listings and exits by private equity firms. Neil Bahal, the founder of Negen Capital, told CNBC that there was “strong fundamental support” for the growth of equity markets in India, backed by favorable policies from the Securities and Exchange Board of India (SEBI), increasing retail investor participation, and broader market opportunities.
He further explained that the surge in IPOs was not merely a reflection of tech companies seeking to raise funds but represented deeper structural changes in the market, underpinned by strong fundamentals. “There is amazing potential in equity markets with supportive policies from SEBI, retail participation, and broad-based opportunities,” Bahal remarked.
Outlook for Hyundai Motor India
While the initial trading performance of Hyundai Motor India’s shares may have faced some headwinds, market experts believe that the long-term potential of the company remains robust. Hyundai Motor India has established itself as a dominant player in the Indian automotive market, with a strong track record of sales and customer loyalty. The company’s ability to introduce new models that cater to the diverse preferences of Indian consumers, coupled with its investment in electric and sustainable vehicle technology, positions it well for future growth.
As the largest subsidiary of Hyundai Motor Company outside South Korea, Hyundai Motor India’s performance on the stock market will be closely watched by investors, analysts, and competitors alike. The IPO has not only marked a significant milestone in the company’s journey but has also set a precedent for future global public offerings by other large multinationals operating in India.
While the initial volatility in share prices may concern some short-term investors, the broader market sentiment remains optimistic about the long-term success of Hyundai Motor India as it navigates the complex dynamics of the Indian stock exchanges and the automotive industry.
