HMIL is selling its shares in the price band of Rs 1,865-1,960 apiece. At the top end of the price band, the IPO is valued at Rs 27,870 crore with the company’s market capitalisation estimated at approximately Rs 1.6 lakh crore post-listing.
According to market experts, there are many factors why the IPO received a lukewarm response despite HMIL being one of the strongest brands in the Indian car market.
Most analysts believe that valuation-wise, the issue is fully priced and leaves no room for investors to make money from listing. At the upper price band of Rs 1,960, HMIL is available at a premium valuation of 26.7x P/E ratio based on FY25E post-issue annualised earnings per share (EPS).
The street is also not excited given the entire issue is an offer for sale (OFS), meaning Hyundai Motor India will not receive any funds from the IPO. Analysts also stated that since the promoter — Hyundai Motor Company — is offering a 17.5% stake in the issue, an additional 7.5% stake sale is anticipated within three years to meet regulatory requirements. This may create selling pressure in future.
Most analysts gave a ‘subscribe for long term’ rating to the IPO. A few brokerages also advised investors to avoid the mega IPO.
Hyundai on Monday raised Rs 8,315 crore from anchor investors. Hyundai allotted 4.24 crore shares to 225 funds at Rs 1,960 apiece, the higher end of its issue price band. Marquee global investors and domestic mutual funds participated in the anchor round.
The allotment for the shares of Hyundai Motor IPO will be finalised on Friday, while the stock is likely to be listed on the BSE and the NSE on October 22, 2024.
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