Hyundai's IPO Stumbles Amid Auto Industry Challenges

Hyundai Motor India's share debut fell by 7.6% due to high share valuation and an auto industry slowdown, leading to tepid retail investor interest. Despite being oversubscribed by institutional investors, concerns over future earnings and an increase in royalty rates deterred retail engagement.

Hyundai Motor India faced a rocky market debut, with shares plummeting by 7.6% following its initial public offering (IPO). The stock began trading below its offer price amid lukewarm retail investor interest, largely due to apprehensions about the high valuation and an industry-wide slowdown in auto sales.

Despite being oversubscribed more than two-fold, the $3.3-billion IPO primarily attracted institutional investors. The anticipated valuation of $19 billion was undermined by fears of inadequate future earnings and an increase in the royalty rate paid to its Korean parent company.

This decline positions Hyundai as one of the majority in India's top 10 IPOs that have fallen on debut, exemplifying the current market's challenges. Experts suggest that the elevated share price and subdued car sales contributed to the lackluster debut. However, Hyundai remains optimistic about future endeavors, planning to use the IPO proceeds for research and product launches.

(With inputs from agencies.)