Shares of Hyundai Motor India, the country’s second-largest automobile manufacturer, had a disappointing debut on the stock exchanges on Tuesday, October 22, 2024, following its initial public offering (IPO). The stock opened below its issue price and continued to trade in the red, raising concerns among investors.
At 10:17 AM, Hyundai Motor India shares were quoted at ₹1,871 on the National Stock Exchange (NSE), down 3.26% from its IPO issue price of ₹1,960. On the Bombay Stock Exchange (BSE), the stock listed at ₹1,931, a 1.47% discount to its issue price, while on the NSE, it debuted at ₹1,934, reflecting a 1.32% discount. Nearly 13.88 million shares exchanged hands on both exchanges, indicating significant trading activity, yet the stock struggled to gain traction.
Disappointing listing Amid market volatility
Hyundai Motor India’s weak listing is attributed to multiple factors, including market volatility and concerns about the stock’s high valuation at the time of its IPO. Despite being a dominant player in the Indian automobile market, the subdued response from investors has led to a cautious outlook on the stock.
Market experts suggest that while Hyundai Motor India has strong fundamentals and a well-established presence in the auto industry, the high IPO pricing coupled with current market conditions has dampened investor sentiment. Some analysts have pointed to the broader slowdown in the auto sector, which could further weigh on the stock’s near-term performance.
Should you buy, sell, or hold?
With Hyundai Motor India’s stock trading lower than its IPO price, investors are wondering whether to hold on to their shares, book profits, or wait for further corrections before entering.
Sudip Bandyopadhyay, Group Chairman of Inditrade Capital, views Hyundai Motor India as a long-term play. He believes the stock has the potential to deliver strong returns over time, citing the historical performance of other automobile companies like Maruti Suzuki as an example. However, Bandyopadhyay cautions that there is no immediate rush for new investors to buy the stock. “Once the stock settles, buying opportunities may arise,” he advises, suggesting that potential buyers should wait for the stock to stabilize at lower levels.
Ambareesh Baliga, an independent analyst, has a more cautious outlook. He argues that there is no immediate scope for an upward move in Hyundai Motor India’s shares and advises against buying the stock post-listing. “Investors who applied for Hyundai Motor India IPO can book profit,” he recommends, adding that a major correction in the stock price would be a better opportunity for potential buyers. Baliga suggests waiting for the stock to drop to levels between ₹1,500 and ₹1,550 before considering a purchase.
Vikas Sethi, Managing Director of Sethi Finmart, shares a similar sentiment, advising short-term investors to sell the stock amid current market volatility. “Short-term investors should ‘Sell’ to avoid further losses,” he notes, while recommending long-term investors to ‘Hold’ as the stock could recover in the future. He also suggests that if the stock falls to the ₹1,500 to ₹1,600 range, it could be a good opportunity to buy again.
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Astha Jain, Senior Research Analyst at Hem Securities, believes that the listing performance of Hyundai Motor India was largely in line with expectations. She advises investors who were allotted shares during the IPO to hold the stock for at least 5-6 months to realize potential gains. For those looking to buy, Jain suggests entering around ₹1,800 to ₹1,850. “Short-term investors should switch to a long-term view if they want positive returns,” she adds, while also pointing out that large IPOs like Hyundai Motor India’s often see lackluster post-listing performance due to stretched valuations and market conditions.
Conclusion: A mixed bag of opinions
Hyundai Motor India’s debut on the stock market has been less than stellar, with the stock trading below its issue price on both NSE and BSE. Market analysts remain divided on the stock’s future performance, with some recommending profit booking or waiting for lower levels to enter, while others suggest holding the stock for long-term gains.
Short-term investors looking for quick profits may want to exit, while long-term investors could consider holding on to their shares as Hyundai’s strong fundamentals and market position may drive future growth. As the market stabilizes and the stock price adjusts, potential buyers might find better entry points around the ₹1,500-₹1,600 range, as suggested by several analysts.
Hyundai Motor India remains a key player in the Indian auto industry, and its long-term prospects, especially with its cutting-edge technology and strong product lineup, should not be overlooked by investors willing to weather short-term volatility.
