Despite record-breaking fundraising, Hyundai Motor India's stock struggles on its first day of trading. Analysts attribute the decline to overpricing and market conditions.
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| Hyundai Motor India's IPO faces a disappointing debut as shares drop 7.2%. Concerns over valuation and industry slowdown deter retail investors. Image Courtesy: Hyundai |
Mumbai, India – October 22, 2024:
Hyundai Motor India's much-anticipated initial public offering (IPO) has experienced a rocky start, with shares dropping 7.2% on their market debut Tuesday. The tepid response from retail investors, coupled with concerns over the stock's valuation and an industry slowdown, contributed to the disappointing performance.
The IPO, India's largest this year, raised $3.3 billion, but it was heavily oversubscribed by institutional investors. Retail investors, however, were hesitant to participate due to concerns about the stock's pricing and potential for short-term gains.
Analysts attribute the weak market debut to several factors, including the high share valuation, near-term weakness in car sales, and an increase in the royalty rate paid to Hyundai's Korean parent. The company's valuation was set at 1.48 trillion rupees ($17.6 billion), which some investors deemed excessive.
Despite the initial setback, Hyundai Motor India's management remains optimistic about the company's long-term prospects. They attribute the recent slowdown in car sales to seasonal factors and expect the market to rebound. The company also plans to invest the proceeds from the IPO in research and development to expand its product portfolio and maintain its competitive edge.
While the IPO may have stumbled out of the gate, some analysts believe that Hyundai Motor India's strong brand, focus on SUVs, and long-term growth potential make it a valuable investment. As the company continues to execute its strategy and navigate the challenges of the automotive market, its stock performance may improve over time.