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The debut of Hyundai Motor India on the Indian stock market was met with a disappointing decline, as the company's shares fell by approximately 6% on their first day of trading. Despite a strong showing from leading brokerage houses, which issued 'buy' ratings for the newly listed stock, investor sentiment seemed to be hesitant. The shares, which were priced at Rs 1,960 during the initial public offering (IPO), closed their first day at Rs 1,819.60, having opened at Rs 1,934, a 1.3% decrease from the IPO price.
Analysts attributed the lackluster debut to a combination of factors, including the massive size of the IPO, the prevailing market sentiment, and the negative performance of the broader Nifty index. Saral Seth, VP of Institutional Equities at Indsec Securities, suggested that a smaller IPO might have yielded better results. He emphasized that despite the large issue, the market's flat opening was a positive sign, indicating its ability to absorb such a sizable offering. Despite the initial decline, Seth remained bullish on the stock, forecasting a re-rating to Rs 2,200-2,400 in the next 3-6 months. He highlighted Hyundai's superior product profile compared to Maruti Suzuki and argued that its valuations deserved a premium.
Other market experts echoed similar views about Hyundai's long-term prospects. Kranthi Bathini, Director - Equity Strategy at WealthMills Securities Pvt Ltd, linked the sharp fall to the overall negative sentiment prevailing in the market, citing the Nifty's significant correction as a contributing factor. Despite the initial downturn, he maintained that Hyundai Motors possesses a strong business model that supports its future growth potential. Mrunmayee Jogalekar, Auto Research Analyst at Asit C Mehta Investment Intermediates Ltd, agreed, emphasizing the company's strong fundamentals and predicting an uptick in the stock's performance in the medium to long term. Global brokerage firm Nomura also expressed confidence in Hyundai's future, initiating coverage with a 'Buy' recommendation and a target price of Rs 2,472. They highlighted the trend of premiumization in the Indian car industry as a key driver of Hyundai's growth.
Despite the bearish sentiment surrounding the IPO, various brokerage houses expressed confidence in Hyundai Motor India's future. While some firms, like Emkay Research, set a more conservative price target of Rs 1,750, based on a projected 5% annual profit growth over the next three years, others, like Indsec Securities, Nomura, and WealthMills Securities, maintained their optimistic outlook, predicting a significant upward trajectory for the stock. This underscores the prevailing sentiment that while the initial market performance might be impacted by external factors, Hyundai Motor India's long-term prospects remain robust, driven by a strong business model and favorable market conditions.
Source: Hyundai Motor India's shares give in to gravity on day 1, despite analyst backing