Hyundai Motor India (Photo: Shahrukh Shah/ News18)
Hyundai Motor India had a weak debut on Tuesday, opening at Rs 1,934 on the NSE, a discount of 1.3%; What should investors do now?
Shares of Hyundai Motor India Ltd staged a recovery in Wednesday’s trade following a tepid stock market debut during the previous session. The stock moved up 5.92 per cent to hit a day high of Rs 1,928.15.
Hyundai Motor India had a weak debut on Tuesday, opening at Rs 1,934 on the NSE, a discount of 1.3 per cent, or Rs 26, below the issue price of Rs 1,960. The stocks also closed 6 per cent lower at Rs 1,820 from their listing price on Tuesday.
Hyundai’s initial public offering (IPO) was open for subscription between October 15 and October 17. Overall, the Hyundai Motor issue received 23,63,26,265 bids against 9,97,69,810 shares on offer with a total subscription of 2.37 times, thanks to institutional investors.
The IPO was entirely an offer-for-sale (OFS) by its South Korean parent Hyundai Motor Company. Ahead of its initial share sale, the company had raised Rs 8,315.3 crore from anchor investors.
Should You Book Profit?
Emkay Global has initiated coverage on Hyundai but with a ‘Reduce’ call, suggesting a 12-month target price of Rs 1,750. “We initiate coverage on Hyundai Motor India (HMIL) with REDUCE (TP of Rs1,750, at ~23x core Sep-26E PER, similar to MSIL) amid a lackluster ~5 per cent EPS CAGR over FY24-27E. HMIL has established a strong franchise in India; however, lack of major launches (key growth driver historically in PVs) over the next 12-18M, muted ~5 per cent capacity CAGR, higher royalty, and lower treasury income are likely to restrict EPS growth,” the brokerage stated.
“While Maruti Suzuki India Ltd (MSIL) (REDUCE) also faces similar near-term growth challenges, we prefer it over HMIL given its catch-up on operational and financial metrics (even on lower SUV mix) with a much-diversified product and powertrain mix and a higher growth optionality (potential small-car recovery, aggressive 8% capacity CAGR, 7-seater SUV launch in H2FY26E, and 10 new models by 2030) driving a superior 6%/10% revenue/EPS CAGR over FY24-27E,” Emkay further said.
Meanwhile, on listing day, global brokerage firm Nomura has initiated coverage on Hyundai Motor with a ‘Buy’ rating and a target price of Rs 2,472.
“The company is riding on style and technology and its ongoing premiumization should drive high-quality growth. There is a long runway for the Indian car industry – current penetration at 36 cars/1,000 people. HMI poised for healthy long-term growth due to its style and technology. Capacity expansion in H2 and the launch of several new models (including four EVs) over the next 3-4 years are the key catalysts,” Nomura said.
Another global brokerage firm, Macquarie, also initiated coverage on Hyundai Motor with an ‘Outperform’ rating and a target price of Rs 2,235.
“The company is a pure play on PV premiumisation and growth. Macquarie believes that Hyundai deserves to trade at a premium PE multiple versus peers and its market share in core segments has stabilised/improved from recent lows. The global brokerage firm sees a favourable portfolio mix and premium positioning. Powertrain optionality, including parent capabilities and market share upside risk,” Macquarie said.
Hyundai Motor India is a part of South Korea’s Hyundai Motor Group, which is the third largest auto original equipment manufacturer (OEM) in the world based on passenger vehicle sales. It manufactures and sells four-wheeler passenger vehicles, including models such as sedans, hatchbacks, SUVs, and electric vehicles (EVs).
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