Hyundai Motor India shares fall 7%

Catch the action from today’s listing ceremony of Hyundai Motor India Limited at our Exchange @NSEIndia. #NSEIndia #listing #IPO #StockMarket #ShareMarket #HyundaiMotorIndiaLimited @ashishchauhan pic.twitter.com/wMExzvIT39

— NSE India (@NSEIndia) October 22, 2024

Shares of Hyundai Motor India dropped as much as 7% on Tuesday in their market debut following the country’s largest ever initial public offering (IPO). The stock closed at 1,819.60 rupees, below its IPO price of 1,960 rupees, giving the company a valuation of under $18 billion compared to the targeted $19 billion. Despite the IPO being oversubscribed more than two-fold last week, retail investors were deterred by pricing concerns and worries about their ability to make gains on the listing.

Glimpses of the celebration of the listing ceremony of Hyundai Motor India Limited today at our Exchange@NSEIndia. #NSE #NSEIndia #IPO #ListingCeremony #HyundaiMotorIndiaLimited @ashishchauhan

Music: Harmony Ikson pic.twitter.com/n0hhshs4xH

— NSE India (@NSEIndia) October 22, 2024

Shares of Indian rivals have also slipped in recent weeks as car sales slow after two years of record highs, with customers delaying purchases due to stubborn inflation. Arun Kejriwal, founder of Kejriwal Research, said, “Hyundai’s issue has been stiffly priced and that seems to be weighing down on its listing as well. Besides, the volumes seen so far are driven only by institutional investors, and is rather poor for an IPO of Hyundai’s size.”

#WATCH | Why did Hyundai Motor India witness a lacklustre listing?@nikunjdalmia explains the reasons, as he reveals if betting on the automaker will prove beneficial in the long-term#HyundaiMotorIndia #Hyundai pic.twitter.com/jcOP5yeAlC

— ET NOW (@ETNOWlive) October 22, 2024

Hyundai Motor plans to use proceeds from the sale of a 17.5% stake in its Indian unit to invest in research and launch new products as it faces competition from domestic rivals Tata Motors and Mahindra & Mahindra. Jaehoon Chang, CEO of Hyundai Motor, said at the listing ceremony in Mumbai, “Hyundai Motor will play a crucial role in Hyundai Motor India’s long-term growth through our collaboration in R&D, design, manufacturing.” While Hyundai’s market valuation is much smaller than Indian market leader Maruti Suzuki’s $45 billion, analysts have expressed concerns over the narrower gap in their price-to-earnings (P/E) ratios.

Hyundai shares dip post-IPO debut

The issue had valued Hyundai at 26 times its fiscal 2024 earnings, not far off the multiple of 29 for Maruti. However, some major brokerages see long-term value in the stock. Nomura started coverage of Hyundai with a “buy” rating and a price target of 2,472 rupees, citing the company’s high concentration of SUVs in its portfolio. Macquarie analysts also began coverage with an “outperform” rating and a price target of 2,235 rupees, noting Hyundai’s SUV-centric portfolio commanded a P/E premium. Tarun Garg, Hyundai India’s chief operating officer, said at the listing ceremony, “We shall leverage our deep understanding of consumer preferences to successfully expand our passenger vehicle portfolio.” Euisun Chung, Executive Chairman of Hyundai and CEO of Hyundai Motor Group, and Ashishkumar Chauhan, Managing Director and CEO of the National Stock Exchange (NSE), attended the listing ceremony. Company executives assured that a recent slowdown in India’s sales is nothing to worry about. Shares of Maruti and Tata Motors were down 1%, in line with the Nifty Auto index, on the day of Hyundai Motor India’s market debut.