Hyundai Motor India’s mega initial public offering (IPO) was subscribed 18% on the first day on Tuesday with bids for 17.8 million shares against 99.8 million on offer.
The Rs 27,870-crore IPO, which is the biggest public issue in the country, will close for subscription on Thursday.
The portion set aside for retail investors was subscribed 26%, while the non-institutional investors (NIIs) portion was subscribed 13% at the end of Day 1. On the other hand, qualified institutional buyers (QIBs) subscribed to 5% of the portion set aside for them.
Through the IPO, which is a complete offer for sale, Hyundai Motor plans to offload 17.5% stake in its Indian arm.
The company has set aside at least 35% of the issue size (after anchor investments) for retail investors, 15% for NIIs and up to 50% for QIBs.
On Monday, the company allocated 42.4 million shares or 30% of the IPO to anchor investors, mobilising Rs 8,315.3 crore, in one of the biggest pre-IPO rounds in the country. The shares were allocated at the upper end of the price band of Rs 1,865-1,960 apiece.
While the IPO created a lot of buzz among investors, its premium in the grey market has seen a sharp fall in the last few days. As of Tuesday, the stock was trading at a premium of Rs 45, down from Rs 370 earlier this month.
The reasons cited by experts for the sharp fall in premium include higher-than-expected valuation, weak industry growth outlook, falling market share of the company and revenue from spare parts being accounted in the parent company financials rather than the Indian unit.
Brokerage firm Motilal Oswal Financial Services recommended investors to ‘subscribe for long term’.
“At the upper price band of Rs 1,960, the issue is priced at 26.3x FY24 price-to-earnings and looks reasonably priced compared to Maruti Suzuki (India) which is trading at 29.8x,” the brokerage firm said. “We expect HMIL to be a key beneficiary of growth in the PV segment due to its strong presence in the SUV market.”