Hyundai set to hit the bourses with flat to modest listing gain

Shares of India’s second-largest carmaker Hyundai Motor India Ltd (HMIL) are expected to debut on the domestic stock exchanges with flat to modest listing gain on Tuesday, said multiple analysts after the recently concluded initial public offering (IPO) received a lukewarm response from retail investors and non-institutional investors (NIIs).

The Rs 27,870 crore IPO of HMIL, the largest in India’s capital market history, was subscribed 2.37 times during the recently concluded three-day bidding process.

“We believe listing could be at par for the IPO and since we had long term subscribe rating to the issue, long term investors who missed the opportunity in the IPO may look to get exposure on the same if there is an opportunity during the listing day,” said Narendra Solanki, Head Fundamental Research – Investment Services, Anand Rathi Shares and Stock Brokers. “For investors who may have missed the chance to participate during the IPO, there could still be an opportunity to invest in the stock on the listing day,” added Solanki.

In a positive development for investors who were allotted the shares, the grey market premium (GMP) on unlisted shares of Hyundai rebounded from falling in the negative the previous week. The GMP on Hyundai shares on Monday stood in the range of Rs 65-70 per share, a modest premium of 3.5% to the IPO price of Rs 1,960 per share. If the GMP is anything to go by, the estimated listing price of shares could be in the range of Rs 2,025 – 2,030 apiece.

Experts also believe that it won’t be a surprise if HMIL shares hit the bourses at a discount given that majority of 50% of the offer size received a sluggish response from the NIIs and retail investors which got undersubscribed. It was strong buying from Qualified Institutional Buyers (QIB) on Day 3 that helped the IPO to sail through.