Hyundai Motor India’s IPO sees muted response from retail investors, issue subscribed 2.37 times

India’s biggest ever Initial Public Offering (IPO) of Hyundai Motor India Ltd., the bidding for which ended on Thursday. received lukewarm response from retail investors but was subscribed 2.37 times helped by Qualified Institutional Buyers (QIBs).  

As per data from the BSE, updated at 7 p.m. on Thursday, the IPO was subscribed 6.97 times in the QIBs category and 0.50 times in Retail Individual Investors category. The employee portion was subscribed 1.74 times.

Going by this, the IPO received lowest retail subscription among some of the big IPOs that had hit the Indian capital markets. 

While the LIC IPO had seen retail investor subscription of 1.99 times, it was 2.31 times for Coal India and about 15 times for Reliance Power Ltd., according to analysts.

The Hyundai Motor India IPO which was a 100% offer for sale by its parents opened for subscription on Tuesday in the price band of ₹1,865 and ₹1,960 per share. 

At the upper band the IPO would fetch ₹27,870.16 crore.

The 100% OFS by the parent was not liked by the retail investors as no money would be coming to the company, analysts said adding the pricing was too aggressive to make it attractive for retail investors to make any profit. Thus the gray market premium was low.

Commenting on the below expectation participation of retail investors Arun Kejriwal, founder, Kejriwal Research said, “They did not apply because the issue was expensive by about ₹200 and that is why the market premium crashed from ₹700 to Rs ₹500.” 

He said the QIB portion was subscribed more because they are long term

investors who have deep pockets. “But retail investor looks for a quick return and they do not have that kind of capacity to hold on to the issue,” he added.

The allotment of shares is scheduled on Friday and shares will be listed on 22 October.

Published - October 17, 2024 09:39 pm IST