Hyundai’s IPO is a big test for gilded markets

Slow and stey. Concerns are growing about sustainability of India's frothy equity markets. debut of Hyundai Motor's local unit is set to be country's biggest initial public offering and may help to measure anxiety.

$3.3 bln share sale in Mumbai is off to a decent start; issue was 18% subscribed by close of play on Tuesday, first day to bid for stock. It taps local markets touching record highs on surging domestic retail inflows and where valuation multiples are soaring: MSCI India tres at a record 25 times forward one-year earnings, above its 10-year average of 19 times, per LSEG data. Stock market fever is so widespre local news publications are live-blogging Hyundai deal's progress.

It's one of a volley of deals that has catapulted India to top of league tables for Asia's biggest equity capital market by primary issuance. Hyundai India's listing will boost local fundraisings via IPOs to nearly $13 billion so far this year, taking tally to highest since 2021, per Dealogic.

Hyundai's deal itself looks fully priced and is set to put a a floor under carmaker's value. Hyundai India's target market capitalisation of up to $19 billion is 26 times its earnings in year to March 2024, compared to about 29 times for Maruti Suzuki , leer in world's third-largest auto market. Its $46 billion Seoul-listed parent tres at barely 5 times, LSEG data show.

For now, shares in unregulated grey market are changing hands above price range. However, premium has plunged in recent weeks, suggesting that initial public tring may not be as explosive as seen in some recent deals. This could also reflect worries about recent sluggish demand for cars: sector's sales to dealers fell for first time in 10 quarters in three months to end of September.

Or it could simply reflect a harsher reality. Of six stock market listings in India that raised at least $2 billion since 2007, only two churned out gains after first three and six months, per Dealogic. In run-up to deal, bankers reckoned Hyundai India's listing would get away easily. That may still be case. If it tres well in secondary market, that will be a real sign of Indian market's robustness.

Context News

Hyundai Motor's sale of shares in its Indian unit was 18% subscribed on Oct. 15, first day of deal's launch, according to data from exchanges. carmaker has priced up to $3.3 billion issue in a range of 1,865 to 1,960 rupees per share. Mumbai listing would secure a $19 billion market capitalisation for unit at upper end of price range. Its South Korean parent is selling a 17.5% stake in business and no new shares will be issued. deal is India's largest IPO .