The ₹27,870-crore initial public offering (IPO) of Hyundai Motor India Ltd (HMIL) on Tuesday got off to a decent start with 18 per cent subscription even as few brokerages appear to have given a muted endorsement to the share sale..
The IPO received bids for 1.78 crore shares against 9.97 crore shares on offer, according to BSE data. It was the quota reserved for employees that led the subscription charts.
Around 6.19 lakh shares were bid for against 7.78 lakh shares on offer, reflecting subscription of 80 per cent.
The portion for retail individual investors (RIIs) was subscribed 26 per cent, while the non-institutional investors category fetched 13 per cent.
The qualified institutional buyers category saw a 5 per cent subscription. On Monday, HMIL raised ₹8,315 crore from anchor investors.
While some brokerages have recommended that investors subscribe to the issue with a medium- to long-term horizon, others suggest they avoid the issue. Some feel that investors should wait for listing and pick up shares from the market.
Since the announcement of the IPO details, the grey market premium (GMP) has also slumped, that may indicate lacklustre listing gains. As per IPO Watch it is now running at ₹45 which is an improvement over ₹30 on Monday. But it is still lower than ₹170 on October 10.
Observers say that the issue’s large size, its valuation (which is adequately priced)and the current weak conditions of the automobile market as reflected in lower industry sales during September are some of the factors that are leading to some caution.
However, HMIL’s strong standing and the potential ahead are elements which investors should not overlook.
“We recommend ‘subscribe for long term’. At the upper price band of ₹1,960, the issue looks reasonably priced compared with Maruti which is trading at 29.8 times,” a note from Motilal Oswal Financial Services said.
Analysts at Choice Broking recommended that investors subscribe for the long-term.
Amar Nandu, research analyst, SAMCO Securities, however, said the growth of the Indian auto industry is likely to slow due to the higher base effect and investors should avoid the issue.
