Swiggy, Vishal Megamart, Afcons: What Hyundai Motor India's listing means for other big IPOs

A tepid response by retail investors to Hyundai Motor India has a takeaway for the other big companies which are lined up to launch their initial public offering (IPO) in the near term. Data available with exchanges showed that the quota reserved for retail individual investors got subscribed 50% in the case of Hyundai Motor India. Overall, the IPO got subscribed 2.37 times with major support from qualified institutional buyers (QIP)

The company had fixed the price band at Rs 1,865-1,960 for the public offer, which concluded on October 17, 2024. So what does Hyundai Motor India’s subscription levels mean for other major IPOs?

Rakesh Vyas, Co-Chief Investment Officer & Portfolio Manager, Quest Investment Advisors says, “Companies with good business model, large opportunity size and path/growth in profitability would be able to find investor interest across market cycles.”

Sunil Damania, Chief Investment Officer, MojoPMS added that the clear takeaway for other promoters is that investors are increasingly resistant to premium valuations. Additionally, significant fluctuations in grey market premiums further dampened subscription volumes.

Going ahead, the Rs 5,340-crore IPO of Afcons Infrastructure will open on October 25 and the three-day bidding for the issue shall conclude on Tuesday, October 29. The company has fixed a price band of Rs 440-463 for the forthcoming public issue.

According to primedatabase.com, Swiggy and Vishal Megamart are likely to raise Rs 8,000 crore each from the primary market.

On the other hand, G Chokkalingam, Founder, Equinomics Research said, “Hyundai Motor India IPO communicates the point that IPOs have to create a lot of confidence among retail investors in terms of listing gains. That confidence may arise from attractive pricing of issue in terms of earnings or even if earnings do not justify then the business models should create a hype on valuation multiples. If forthcoming large IPOs if they fulfill any of these 2 expectations then there wouldn’t be any limitations on mobilising even large quantum of resources.”

Deepak Jasani, Head of Retail Research, HDFC Securities said, “As far as the size of the appetite of IPO investors is concerned, the subsequent IPOs need not worry. However, the companies should have a unique business model, provide visibility of growth over the long term and have large moats in place. Also they would have to be careful about pricing their IPOs after studying the current market conditions if they wish to have larger participation from the local investors (including non-institutional).”

Shares of Hyundai Motor India are going list on bourses on October 22, 2024 (Tuesday).