Hyundai Motor India IPO: Hyundai GMP Signals Slow Listing,Analysts Encourage Waiting for Ideal Entry - Read Know

Hyundai Motor India IPO: GMP falls to as low as around Rs 50 today when it was opened at Rs 570 in late September. This, in fact is a sharp fall and symptomatic of investor sentiment remaining cautious in view of slowing growth in the automotive sector. The retail and HNIs had been subdued in this historic IPO that is the biggest in Indian stock market history.

Market analysts pointed to soft demand due to investor apprehensions on the valuation of Hyundai with negative views as market conditions become challenging. Many non-institutional investors also remain hesitant on big-ticket IPOs, given previous occurrences at LIC and Paytm IPOs, wherein the respective stocks had undergone a sea change in their fortunes within weeks of listing.

Whilst institutions were interested, qualified institutional buyers (QIBs) still bidded 6.97 times for shares and only retail investors subscribed for half of their allocated portion. Such large weak subscriptions push large institutions to receive more than they were supposed to receive which further cuts caution among would-be buyers.

One fund manager wanted to purchase Hyundai shares if the stock sold weak after listing, thereby taking advantage of high first-day volumes for better entry points. Analysts expect not much price movement on the listing day. They feel that shares could, at best, be trading Rs 100 to Rs 150 below the issue price. This should encourage the missed retail and HNI players as well as QIBs looking to buy from lower levels.

The other is the financial health of Hyundai as it has mailed two-thirds of its cash reserves to its Korean parent in the past couple of years. Aggressive dividend payouts of Rs 17,900 crore have reduced the cash reserves of Hyundai India and its ability to finance future growth. Analysts say investors should be cautious and keep a look out for clearer signals to make a decision on the shares of Hyundai Motor India.