Hyundai Motor India‘s IPO opened for subscriptions for big institutional investors on Monday and is set to open for investors in retail and other categories from Tuesday.

What Happened: The ₹27,870.16 crore IPO is entirely an offer for sale, comprising 14.22 crore shares. The offer price is expected to be between ₹1,865 to ₹1,960, reportedly valuing the automaker at $19 billion (around ₹1.59 lakh crore).

The minimum lot size for an application is seven shares, which means at the upper price band — the minimum amount retail investors are required to invest — will be ₹13,720. 

Hyundai’s maiden share sale, which is the first from a carmaker since Maruti Suzuki went public in 2003, will conclude on October 17. The allocation for the IPO is set to be finalised on Friday, October 18. The IPO will likely list on the BSE and NSE, on October 22.

The grey market premium (GMP) for the Hyundai Motor IPO was at ₹50 as of 12:25 p.m. on Wednesday. At the current GMP, the stock is expected to be listed at ₹2,010 — a premium of 2.5% over the upper price band of ₹1,960.

Investors must note that although GMPs can provide insight into market sentiment regarding an IPO, they are not always a reliable indicator of how the stock will perform upon listing.

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SBI Securities recommended subscribing to the issue for long-term gains. The company has the second-largest market share in the Indian passenger vehicle industry after Maruti Suzuki and is also the second-largest exporter of cars from India, it noted. At the upper price band of ₹1,960, SBI values Hyundai Motor India at 26.3 times FY24 earnings per share, SBI added.

LKP Securities had a “subscribe” rating on the stock and reiterated SBI’s views. With around 15% market share, driven by 68% from sports utility vehicles and over 20% from exports, the company's revenue growth is in line with the industry in India and it has strong return ratios, the research firm noted.

As Hyundai India plans to expand its capacity by 30% over the next two to three years and with four new model launches on the horizon the automaker is poised to compete strongly with its rivals, LKP said.

ICICI Direct Research, on the other hand, expects limited listing gains from the IPO but sees the company delivering healthy double-digit portfolio returns over the medium to long term.

KRChoksey also had a “subscribe” rating for the stock on the back of a robust business model and strategic initiatives aimed at fostering sustained long-term growth.

IDBI Capital also issued a “subscribe” rating on the stock but noted some key risks to its outlook, including potential manufacturing disruptions, insufficient warranty reserves, forex rate fluctuations and challenging regulations and economic conditions.

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