Hyundai India IPO Reaches 42% Subscription on Day 2; 38% Booked by Retail Investors, GMP Drops

The Hyundai India IPO saw a 42% subscription rate by the close of the second day of bidding on October 16, as per data from the National Stock Exchange (NSE). The public offer received bids for 4.17 crore shares, compared to the 9.97 crore shares on offer. Retail investors took up 38% of their allotted portion, while non-institutional investors (NIIs) covered 26% of theirs. The segment reserved for qualified institutional buyers (QIBs) showed stronger demand, with 58% of the available shares subscribed.

This IPO, with a price band ranging from ₹1,865 to ₹1,960 per share, has drawn attention as it is the largest in India's history, surpassing the ₹21,000 crore IPO of LIC. Hyundai Motor Company (HMC), the parent company of Hyundai India, is offloading 14.21 crore equity shares through an offer for sale (OFS). This means there is no fresh issue of shares, and Hyundai India itself will not directly benefit from the proceeds.

Despite the strong interest from institutional investors, the grey market premium (GMP) for Hyundai India shares has been declining, reflecting lukewarm enthusiasm in unofficial trading circles. As of now, the shares are commanding a premium of ₹35 in the grey market, down from earlier levels. This signals a 2% premium over the upper end of the price band.

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Hyundai India’s IPO is open for public bidding from October 15 to October 17, and the final allocation of shares will take place on October 18. Successful bidders will have their shares listed on both the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) on October 22.

The offering marks Hyundai India’s first-ever public issue, following the parent company's decision to reduce its stake. The IPO is significant as it is the first automaker IPO in over two decades, with the last being Maruti Suzuki's public debut in 2003. Hyundai India is the second-largest car manufacturer in India, after Maruti Suzuki, with a market capitalization projected to reach ₹1.6 lakh crore post-listing.

The automaker, which began its operations in India in 1996, currently offers 13 models across various segments. While the company won’t receive any direct capital from this IPO, listing its shares is expected to enhance Hyundai India’s brand visibility and provide liquidity for its stakeholders.

The proceeds from the offer will go directly to Hyundai Motor Company, which is the sole promoter of this IPO. As the entire issue is an offer for sale, the funds raised will not be used for business expansion or debt repayment by Hyundai India.

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Despite the dip in the grey market premium, experts remain optimistic about the long-term potential of Hyundai India’s stock performance, citing the company's strong presence in the Indian automotive market and its solid financial standing.