Hyundai Share Price
Hyundai Motor India (HMI) made headlines recently with its initial public offering (IPO). As the second largest car manufacturer in India, Hyundai was looking to raise 19 billion dollars through this IPO priced at Rs.1960 per share. But the stock had a tough debut and investors are wondering what’s in store for it.
IPO Listing Details
On the listing day, Hyundai share price opened at Rs. 1934 on NSE and Rs. 1931 on BSE, a discount of 1.3% from the issue price. The stock fell further in early trade and was down 6% by noon, at Rs. 1883.9. Despite being oversubscribed 2.37 times, the stock’s performance can be attributed to lack of retail interest.
Market Reaction
The poor debut has spooked analysts. While institutional demand was strong, retail investors bought only half of the allocated shares. Hyundai’s stock performance is in contrast to the general trend of IPOs in India which see strong listing gains. This year’s average first day gain for new listings was 39%.
Analyst Take
Several international brokerages have started covering Hyundai with buy ratings despite the company’s poor launch. At Rs. 2472, Nomura’s target price represents a 26% increase over the IPO price. Additionally, Macquarie’s stock has an outperform rating.
Competition
Hyundai Motor states India operates in a competitive space with Tata Motors and Mahindra & Mahindra as key players. With a market share of 34%, 20%, and 18% in luxury small cars and mid-size SUVs, respectively, the brand has a strong presence in a number of markets that are rapidly growing. Hyundai intends to maintain its market position and expand its product line by investing in research and development using the money raised from the IPO.
The current passenger vehicle (PV) market in India is in line with Hyundai’s strategy with 63% of its sales mix coming from utility vehicles. In a number of operational areas, the company also receives significant support from Hyundai Motor Corporation, its parent company, which will be crucial for its continued success and growth.
Challenges
Despite its positives, Hyundai has some challenges. Analysts say the company will struggle to grow as there are no major launches in the near term and that will remain subdued for next 12 to18 months. The company is only expected to expand its earnings by 5% annually until FY27. So investors may not see significant short-term returns.
Comparison of Valuations
Some analysts feel Hyundai is priced higher than its parent company in South Korea which may deter investors. But IPO pricing is in line with Indian peers like Maruti Suzuki. The difference in demand between institutional and retail investors makes Hyundai to relook at its market strategy to engage with the latter.
Future Possibilities
Going forward the Indian auto market is expected to grow big time with growing middle class and increasing vehicle demand. Society of Indian Automobile Manufacturers reported 4.2 million passenger vehicles were sold last fiscal and this number is expected to shoot up in coming years.
Analysts feel new model launches including the planned electric version of Creta and Alcazar will help Hyundai to be more competitive. The company’s ability to adapt to changing consumer preferences and market trends will be key to its growth.
Conclusion
In short Hyundai’s IPO has had a tough start as the Hyundai share price reflecting investor caution. While present performance suggests that strategic improvements are necessary to increase customer interest and leverage on growth opportunities in the Indian vehicle business, analysts are also projecting long-term success. As the situation develops, investors will be watching it carefully to see how Hyundai overcomes the obstacles and regains its market momentum.