Hyundai Motor IPO has convincingly demonstrated that on D Street size and success do not go hand in hand. The IPO, bids for which concluded on October 18, was the biggest in Indian history that was designed to raise a massive amount of Rs 27,870 crore and priced its shares at Rs 1,865 to Rs 1,960.
The GMP and retail subscription figures tell a story completely unpalatable to the management of Hyundai Motor. On the last day of bids, institutional investors came to the rescue of the landmark IPO by bidding aggressively and ending with an overall subscription of 2.37 times.
Hyundai allotment today, listing loss indicated
The GMP data showed an incredible drop – from Rs 570 on September 27 to (-) Rs 32 on October 17, the last day of bidding. It indicated a listing loss of 1.63%, according to investorgain. The GMP slipped into the negative territory on October 17, the last day of bidding for the IPO.
Lowest retail subscription among mega IPOs
According to primedatabase, of the largest IPOs in India, before Hyundai IPO, the issue with lowest share of retail subscription was GIC (IPO of Rs 11,257 crore) that recorded 0.6 times bids. Hyundai managed only 0.5 times.
Other IPOs managed to get the retail portion fully subscribed – 1.6 times by LIC (total amount raised Rs 20,557 crore), 2.2 times by Coal India (total amount Rs 15,199 crore) and SBI Cards (total amount Rs 10.341).
Valuation concerns about Hyundai IPO
One of the possible reasons for the IPO by the Korean auto major was concerns about high valuations. After the price band was announced, analysts expressed this concern to the media.
One analyst said the pricing indicated a valuation of 26 times EPS on the basis of FY24 numbers and almost 30 times EPS on the basis of FY25 projections. A lower price band could have worked, they said.
Only OFS, no fresh shares added to worry
Another concern was about the entire issue being through OFS (offer for sale) which means the promoters were diluting their stake through the issue. No fresh shares were offered through the IPO. It means the entire IPO proceeds would go to the promoters and not to the company.
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