Hyundai India shares drop 6% on market debut after record IPO

Reuters —

Shares of Hyundai Motor India dropped as much as 6% in their market debut on Tuesday, after a tepid response from retail investors to the pricing of the country’s largest ever initial public offering.

The stock listed at 1,934 rupees ($23) on India’s National Stock Exchange, below its offer price of 1,960 rupees ($23.31), and traded down 4% at 1,882.10 rupees ($22.39) by 0548 GMT (1:48 a.m. ET), giving the company a valuation of 1.53 trillion rupees ($18.2 billion).

Hyundai, India’s No. 2 carmaker with a market share of 15%, was targeting a valuation of $19 billion through the IPO.

Its record $3.3 billion IPO was oversubscribed more than two-fold last week, led largely by institutional investors, but pricing concerns deterred retail investors who worried they would not be able to make gains on the listing.

Shares of Indian rivals have also slipped in recent weeks as car sales slow after two years of record highs, with customers delaying purchases on worries about stubborn inflation.

“Hyundai’s issue has been stiffly priced and that seems to be weighing down on its listing as well,” said Arun Kejriwal, founder of Kejriwal Research.

“Besides, the volumes seen so far are driven only by institutional investors, and is rather poor for an IPO of Hyundai’s size.”

Tuesday’s listing in Mumbai is Hyundai Motor’s first debut outside its home market of South Korea and comes at a time when India’s equity markets have risen sharply.

Workers assemble cars at Hyundai's plant in Sriperumbudur, about 45 km (28 miles) north of Chennai February 2, 2008.

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With competition from domestic rivals Tata Motors and Mahindra & Mahindra,