Hyundai IPO: A Tale of Institutional Demand and Retail Hesitation | Weekly Update October 18th
Hello Readers!
Hyundai’s much-anticipated IPO hit a bit of a snag with retail investors this past week. We’re here to break down what’s happening. But first, let’s take a quick look at some key market highlights from the week that you should know about.
🧾In this Article
Cover story: War spooks market but bulls take charge
📈 Weekly Market Wrap-up
The Nifty 50 index and the BSE SENSEX both experienced slight declines this week. The Nifty 50 closed at 24,854.05, down 0.6%, while the BSE SENSEX closed at 81,224.75, down 0.5%.
| Index | Change (%) |
| Nifty 50 | 0.6% |
| Nifty Bank | 1.1% |
| Nifty Midcap Select | 0.9% |
| Nifty 100 | -0.9% |
| Nifty Midcap 50 | -0.1% |
| Nifty Midcap 100 | -0.5% |
| Nifty Smallcap 50 | 0.9% |
| Nifty Smallcap 100 | 0.9% |
| Nifty IT | 0.0% |
| Nifty Pharma | 0.2% |
| Nifty PSU Bank | 1.0% |
| Nifty Private Bank | 0.8% |
Sector Spotlight
Information technology (IT) stocks, represented by the BSE IT index, saw a slight decline of 1.02%. The BSEFMC index, comprising fast-moving consumer goods (FMCG) stocks, also faced a decline of 1.53%. On the other hand, the BSE CG index, representing capital goods stocks, registered a modest gain of 0.34%. The BSE CD index, representing consumer durables stocks, experienced a more significant decline of 1.2%. Finally, the BSE HC index, representing healthcare stocks, saw a slight decline of 0.47%.
Nifty 100 Top gainers
- Adani Energy Solutions Ltd. = 1,043.30 (↑5.4%)
- Wipro Ltd. = 548.65 (↑4.5%)
- Tech Mahindra Ltd. = 1,687.90 (↑4.2%)
- Larsen & Toubro Ltd. = 3,577.80 (↑3.4%)
- ABB India Ltd. = 8,783.00 (↑3.2%)
Nifty 100 Top losers
- Bajaj Auto Ltd. = 10,063.95 (↓14.9%)
- Avenue Supermarts Ltd. = 3,986.70 (↓13.5%)
- NHPC Ltd. = 84.13 (↓7.4%)
- Mahindra & Mahindra Ltd. = 2,964.25 (↓7.2%)
- JSW Energy Ltd. = 676.85 (↓7.1%)
FII and DII Activity:
Foreign Institutional Investors (FIIs) recorded a net outflow of ₹21,823.34 crores for the week, while Domestic Institutional Investors (DIIs) acted as net buyers, investing ₹16,384 crores in Indian equities throughout the same period.
| Date | FII Net Activity in crores | DII Net Activity in crores |
| 14-Oct-24 | -3,731.59 | 2,278.09 |
| 15-Oct-24 | -1,748.71 | 1654.96 |
| 16-Oct-24 | -3,435.94 | 2256.29 |
| 17-Oct-24 | -7,421.40 | 4979.83 |
| 18-Oct-24 | -5485.7 | 5214.83 |
| Total | -21,823.34 | 16,384 |
Global Gossip
Major indices showed mixed performance. The DOW rose by 412.05 points, closing at 43,275.91, a 0.96% increase. The NASDAQ gained 146.61 points, reaching 18,489.55, up 0.80%. The S&P 500 also experienced a positive trend, adding 49.64 points to finish at 5,864.67, a rise of 0.85%. European markets saw notable gains, with the FTSE increasing by 104.60 points to 8,358.25 (up 1.27%), the DAX climbing 283.54 points to 19,657.37 (up 1.46%), and the CAC rising by 35.16 points to 7,613.05 (up 0.46%). In contrast, the Nikkei declined by 624.05 points to 38,981.75, down 1.58%, and the Hang Seng fell by 447.87 points to 20,804.11, a decrease of 2.11%. The Shanghai Composite, however, gained 43.82 points, closing at 3,261.56, which represents a 1.36% increase.
Rupee Report
The Indian Rupee (INR) experienced a relatively stable week against the US Dollar (USD). The USD/INR exchange rate closed at 84.065 on October 19, 2024, showing a minimal decline of 0.002 points or 0.00% compared to the previous week’s closing. The daily trading range for the week was narrow, indicating limited volatility in the currency pair. Over the past week, the INR appreciated slightly against the USD, reflecting a stronger demand for the Indian currency. However, the overall trend for the INR remains relatively flat, with fluctuations within a narrow range.
Gold Surges
Gold prices experienced a positive week, closing at $2,721.21 on October 19, 2024, which represents a 1.02% increase from the previous week’s closing price. The daily trading range for the week was between $2,692.85 and $2,722.51. Over the past 52 weeks, gold prices have ranged from a low of $1,811.03 to a high of $2,722.51. The weekly return for gold was 1.96%.
🍟 Quick Bites
🚧 The government has approved a new ₹2,642 crore rail-road bridge across the Ganga river, which will run through Varanasi and Chandauli districts in UP, extending the existing railway network by about 30 km.
📉 India’s trade deficit fell to $20.8 billion in September, down from $29.7 billion in August, with total exports at $34.58 billion and total imports at $55.36 billion, according to the Commerce Ministry.
📊 India’s annual inflation rose to 5.49% in September, up from 3.65% in August, with urban inflation at 5.05% and rural inflation at 5.87%, reported by MoSPI.
🚗 Domestic passenger vehicle sales decreased by 1% year-on-year to 3.57 lakh units in September, while sales of 2-wheelers rose 16% to 20.26 lakh units, and 3-wheeler sales increased by 7% to 79,683 units, according to SIAM.
🔎 Stocks in news
💰 Adani Enterprises raised ₹4,200 crore through a Qualified Institutional Placement (QIP).
🚆 L&T secured a significant order from UP Metro Rail Corporation to develop two phases of the Agra metro, valued between ₹1,000 crore and ₹2,500 crore.
🏗️ Godrej Properties won an auction for 6.54 acres of land in Navi Mumbai, planning a premium residential project with a potential revenue of ₹3,500 crore.
📈 Oberoi Realty‘s board approved raising ₹1,500 crore via private placement.
🏢 Cochin Shipyard will sell up to 5% of its shares through an offer for sale at ₹1,540 per share.
🏅 HAL has been granted ‘Maharatna’ status by the Ministry of Finance.
⚓ JSW Infra received an order from Maharashtra Maritime Board to develop and operate an all-weather multipurpose port in Palghar, Maharashtra, under a public-private partnership.
📅 Reliance has set October 28 as the record date for its 1:1 bonus share issue.
🚜 L&T received a significant order from Rashtriya Chemicals and Fertilizers for a fertilizer plant in Raigad, Maharashtra, valued between ₹1,000 crore and ₹2,500 crore.
Earnings corner
📉 Nestlé experienced a 0.95% year-on-year decline in net profit to ₹899.49 crore for the July-September quarter.
📊 L&T Tech saw a 4.57% year-on-year increase in net profit to ₹290.9 crore for the July-September quarter, declaring a dividend of ₹17 per share with a record date of October 25.
💵 CRISIL reported a 12.87% rise in net profit to ₹171.55 crore and declared a dividend of ₹15 per share.
📉 Reliance experienced a 4.78% year-on-year drop in net profit to ₹16,563 crore for the July-September quarter.
📈 Polycab reported a 3.35% year-on-year increase in net profit to ₹439.81 crore for the July-September quarter.
🌬️ JSW Energy‘s subsidiary signed a 25-year power purchase agreement with GUVNL for 192 MW of wind-solar hybrid capacity.
🌟 HDFC Life reported a 15.07% year-on-year rise in net profit to ₹435.18 crore for the July-September quarter.
📉 Bajaj Auto reported a 31.42% year-on-year decline in net profit to ₹1,385.44 crore for the July-September quarter and approved an investment of ₹84 crore in its subsidiary, Bajaj Brazil.
📈 HDFC AMC achieved a 32.09% year-on-year increase in net profit to ₹576.61 crore for the July-September quarter.
📊 Bank of Maharashtra‘s net profit rose 44.25% to ₹1,327 crore, with net interest income increasing 15.41% to ₹2,807 crore.
💰 HCL Tech reported a 10.52% year-on-year rise in net profit to ₹4,235 crore for the July-September quarter, declaring a dividend of ₹12 per share with a record date of October 22.
🔌 Havells reported a 7.69% year-on-year rise in net profit to ₹268.23 crore for the July-September quarter.
📊 Tata Comm recorded a 2.98% year-on-year increase in net profit to ₹227.23 crore for the July-September quarter.
📈 Central Bank reported a 50.91% year-on-year rise in net profit to ₹913 crore for the July-September quarter, with net interest income up 12.62% to ₹3,410 crore.
💼 Mphasis reported an 8% year-on-year increase in net profit to ₹423.33 crore for the July-September quarter.
💹 Infosys reported a 4.7% year-on-year increase in net profit to ₹6,506 crore for the July-September quarter, declaring a dividend of ₹21 per share with a record date of October 29.
📈 LTIMindtree posted a 7.68% year-on-year increase in net profit to ₹1,251 crore for the July-September quarter, with a dividend of ₹20 per share and a record date of October 25.
🎁 Wipro reported a 21.26% year-on-year rise in net profit to ₹3,209 crore for the July-September quarter and approved a 1:1 bonus share issue to be completed by December 15.
📊 Axis Bank recorded an 18% year-on-year rise in net profit to ₹6,918 crore for the July-September quarter, with net interest income up 9% to ₹13,483 crore.
Sustainability news:
JSW Energy‘s subsidiary, JSW Renew Energy Thirteen, received a 700 MW solar power supply order from NTPC.
🚀 IPO corner
Subscriptions:
- Hyundai Motor India Limited: The IPO was undersubscribed with an overall subscription rate of 0.30x. Retail investors subscribed at 0.65x, non-institutional investors at 0.58x, and qualified institutional investors at 0.60x.
- Garuda Construction and Engineering Limited: The IPO was oversubscribed with an overall subscription rate of 11.38x. Retail investors subscribed at 11.23x, non-institutional investors at 7.93x, and qualified institutional investors at 9.03x.
Upcoming IPOs:
- Waaree Energies Limited (Oct 21, 2024 – Oct 23, 2024)
- Deepak Builders & Engineers India Limited (Oct 21, 2024 – Oct 23, 2024)
- Premium Plast Limited (Oct 21, 2024 – Oct 23, 2024)
- Danish Power Limited (Oct 22, 2024 – Oct 24, 2024)
- United Heat Transfer Limited (Oct 22, 2024 – Oct 24, 2024)
- OBSC Perfection Limited (Oct 22, 2024 – Oct 24, 2024)
- Godavari Biorefineries Limited (Oct 23, 2024 – Oct 25, 2024)
- Usha Financial Services Limited (Oct 24, 2024 – Oct 28, 2024)
News:
🌞 Integrum Energy Infrastructure, a renewable energy solutions provider, has filed IPO papers to raise funds for solar projects and general corporate purposes, planning to list on BSE’s SME platform.
💻 Identixweb, an IT firm specializing in SaaS-based digital product solutions, has submitted a Draft Red Herring Prospectus with SEBI for its upcoming IPO, offering up to 3,080,000 new equity shares with a face value of ₹10 each.
🚀 Danish Power is set to launch the biggest-ever SME IPO on October 22, with a price band fixed at ₹360-380 per share, aiming to raise ₹197.90 crore through a fresh issue of 52.08 lakh shares.
📈 Afcons Infrastructure Ltd, which is IPO-bound, received record orders in the first half of FY25, surpassing its previous highest annual business inflow, with order inflows totaling €19,000 crore as the Shapoorji Pallonji Group firm expands its business.
Hyundai IPO: A Tale of Institutional Demand and Retail Hesitation
Hyundai Motor India’s initial public offering (IPO) has concluded with a mix of success and caution. While institutional investors eagerly embraced the opportunity, retail investors were more hesitant, leading to a lower-than-expected subscription rate. This blog delves into the key factors driving this disparity and explores the implications for Hyundai’s future.
Oversubscribed by Institutions, Cautious Retail
The Hyundai IPO was oversubscribed by more than two times, primarily due to strong interest from institutional investors, including foreign funds and domestic banks. However, retail investors, who were allocated 50% of the shares, subscribed only half of their reserved portion.
Pricing Concerns and Market Conditions
One of the primary reasons for the lower retail participation was the IPO’s pricing. Some analysts believed that Hyundai’s shares were not priced attractively for retail investors and high net worth individuals. The company’s valuation of $19 billion, which is around 40% of its Korean parent, raised concerns among some investors.
Additionally, the recent slowdown in car sales in India due to rising inflation and economic uncertainties also influenced retail investors’ decision-making. The potential impact of this slowdown on Hyundai’s future performance may have made some investors hesitant to invest.
Outlook for Hyundai’s Shares
Despite the lower retail participation, Hyundai’s IPO remains India’s largest in 2024. The company’s strong fundamentals, coupled with the growing demand for automobiles in India, make it an attractive investment proposition. However, the performance of Hyundai’s shares in the secondary market will depend on various factors, including macroeconomic conditions, competitive landscape, and the company’s ability to execute its growth strategy.
Conclusion
Hyundai Motor India’s IPO has demonstrated the strong appetite for Indian equities among institutional investors. However, the cautious approach of retail investors highlights the challenges of pricing large IPOs and the impact of market conditions on investor sentiment. As Hyundai’s shares begin trading, it will be interesting to see how they perform and whether they can attract more retail investors in the future.
Upcoming key financial events for the week:
| Date | Event |
| 24-Oct-24 | Flash Manufacturing/Services PMI (France) Flash Manufacturing/Services PMI (Germany) Flash Manufacturing/Services PMI (United Kingdom) Flash Manufacturing/Services PMI (United States) Unemployment Claims (United States) |
