Hyundai IPO GMP: Investors considering Hyundai Motor India’s record-breaking initial public offering (IPO) should be prepared to hold the stock for at least a year to achieve substantial returns.
Analysts anticipate a modest listing for the country’s second-largest car manufacturer, with grey market trends suggesting a moderate opening.
Hyundai IPO: What GMP indicates
According to an ET report, as of Monday evening, the grey market premium or GMP for Hyundai shares was Rs 30, or 1.5% above the upper end of the issue price band of Rs 1,865 to Rs 1,960.On October 4, the GMP for Hyundai shares was Rs 370.
GMP refers to the additional price investors are willing to pay for shares in the unofficial market before they are officially listed, over and above the IPO price.
The Rs 27,870 crore Hyundai IPO is set to open on Tuesday and close on Thursday.
Why has Hyundai GMP crashed?
Krishna Appala, senior research analyst at Capitalmind Research, told ET, “The grey market premium has declined in recent weeks due to heightened market volatility and dampening demand. In the short term, Hyundai may face limited growth prospects as increased competition continues to erode market share.”
Analysts have noted that the issue pricing leaves little room for a strong listing, similar to other recent issues such as Bajaj Housing Finance and Ola Electric Mobility.
As a result, the stock is considered a better investment for those willing to hold it for at least a year.
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Hyundai IPO: What should investors expect?
Analysts at Bajaj Broking Research said, “Although the issue appears fully priced, Hyundai is strategically positioned for substantial growth following its current expansion efforts, which may provide value in the long run. We recommend investors consider holding their shares for the long term, ideally 1-3 years, to maximise potential rewards.”
Shashank Kanodia, assistant vice president of research at ICICI Direct, suggested that if held for over a year, the stock’s returns could reach “double digits”. He added, “The company has a decent share of SUV (Sports Utility Vehicle) sales, which comprise 63% of its PV (Passenger Vehicles) sales domestically as of FY24 versus the industry share of 60% with leading market share in mid-SUV space.”
Some analysts have also advised investors to consider waiting for the listing day.
Aniruddha Sarkar, CIO of Quest Investment Advisors, explained, “Since it’s a large issue, there would be many sellers on the listing day, and the shares could be available at lower prices.”
