Expecting big listing gains from Hyundai IPO? 3 reasons you shouldn’t

The initial public offering (IPO) of Hyundai Motor India has witnessed tepid subscription so far as experts recommended investors to be cautious, citing valuation concerns.
Analysts had also questioned its valaution, with price band set between Rs 1,865 and Rs 1,960 per share. Aiming to raise a staggering Rs 27,856 crore, this marks the largest IPO in India’s history. It’s also the first automaker IPO since Maruti Suzuki’s in 2003. Despite the buzz surrounding the offering, investor response has been lukewarm, raising questions about its short-term performance.
By October 16, the Hyundai IPO had seen just 22% subscription, with retail investors subscribing 0.32 times, Qualified Institutional Buyers (QIBs) 0.05 times, and Non-Institutional Investors (NIIs) 0.17 times.
Given these numbers, experts are advising against expecting a big listing day pop. Here are three reasons why.
One of the key indicators for IPO performance is the grey market premium (GMP), and Hyundai’s isn’t setting the markets on fire. As of October 16, the GMP stands at Rs 67, translating to a modest 3.42% expected gain, with an estimated listing price of Rs 2,027. This is a far cry from the Rs 570 GMP seen just a couple of weeks ago, which suggested more bullish sentiment.
Market experts believe this decline in GMP reflects the cooling excitement around the IPO. With the issue size being large and the valuation higher than industry peers like Maruti Suzuki, which trades at a price-to-book value ratio of 4.79 times compared to Hyundai’s 13.11 times, the margin of safety for investors is reduced.
Amar Nandu, Research Analyst at SAMCO Securities, notes, “Given the size of the IPO, most applicants are likely to receive shares, which could limit any significant post-listing price surge.”
Another factor weighing down the potential for quick gains is Hyundai’s promoter stake sale plan. The company’s promoters are offloading a 17.5% stake in this IPO, with an additional 7.5% stake sale expected within the next three years to meet regulatory requirements. This looming selling pressure could dampen demand in the short term, making the IPO less attractive to those hoping for immediate returns.
The broader sentiment in the auto industry isn’t helping either. While Hyundai boasts a strong market position and has plans to invest Rs 32,000 crore for future growth, the industry is currently facing headwinds. There’s been a slowdown in auto sales, which is expected to impact the company’s earnings over the next few quarters.
Experts have cautioned that while Hyundai compares favourably to Maruti Suzuki, its listing may be tepid.

Despite these concerns, some brokerages are optimistic about Hyundai’s long-term prospects. ICICI Direct and Jefferies, for example, have recommended a “Subscribe for Long Term” rating, noting that Hyundai’s strong market position and financial health make it a solid bet for patient investors.
Hyundai’s dominance in the SUV market—where it draws 67% of its revenue—along with its focus on premium products, gives it a strong foothold. The company’s plans for capacity expansion, new product launches, and entry into the electric vehicle (EV) space are also seen as positives for its long-term growth.
Gaurav Garg, Research Analyst at Lemonn Markets Desk, pointed to Hyundai’s strong operational metrics, including its local sourcing strategy and impressive revenue growth. “Hyundai has achieved a compound annual growth rate (CAGR) of 21.4% between FY22-24, largely driven by its SUV sales,” Garg said, adding that Hyundai’s leadership in this segment will bolster its future prospects.
For those expecting Hyundai’s IPO to deliver quick profits, experts recommend managing expectations. The large issue size, high valuation, and broader industry challenges make it unlikely that Hyundai will see the explosive listing gains investors have enjoyed from other IPOs in recent months.
However, for long-term investors, Hyundai’s growth story remains intact. Its robust market position, strategic focus on EVs, and plans for future expansion all make it an attractive investment for those willing to look beyond the initial listing.
In the words of Mehta, “If you’re a long-term investor, Hyundai fits the criteria. But one should not expect a quick buck on listing.”
As Hyundai Motor India’s IPO continues to unfold, investors will need to weigh the risks and rewards carefully. While the short-term gains might be modest, the company’s long-term potential is still promising, especially for those willing to stay the course.
(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts and brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading decisions.)