Money-Wise: Hyundai IPO falls flat on D-Street. What should be the next step for investors?

The lacklustre debut of one of the most anticipated initial public offerings(IPOs) - Hyundai Motor India - failed the expectations of experts and left investors worried if they should hold their investments or try to cut their losses early.

The shares of Hyundai Motor India were listed in the stock market at Rs 1,960, which was a 1.5 per cent discount on their issue price.

The stock debuted at Rs 1,934 on the National Stock Exchange (NSE) and Rs 1,931 on the Bombay Stock Exchange (BSE), which was lower than the suggestion of the grey market premium (GMP).

The Rs 27,870 crore IPO had achieved full subscription only on the last day, which was a reflection of retail investors' cautious approach.

Explaining this slump in performance of the IPO to WION, Narendra Solanki, Head Fundamental Research - Investment Services, Anand Rathi Shares and Stock Brokers, said, "I think the valuation was a major setback for the investors, especially the retail investors, who generally look for some listing gains as well apart from medium to long-term gains. The IPO was fully priced at the upper band and there was hardly any room left for listing gains."

What should be the next step for Hyundai IPO's investors?

Now that the IPO has made its debut in the market, many investors have been worried about what should be the next step.

Solanki suggested that remaining invested in the IPO is not that bad an idea. "I think the investors could continue to remain invested as there is nothing fundamentally wrong with the business as the company is second largest domestic player and also largest player when it comes to export volumes. Also, the future lineup of launches, especially the EV line, should also add to the market share in this space and the company should do well in the long term," he said.

Watch: Mega IPOs With Lower Returns Spur Worries

But does the lacklustre opening of the Hyundai IPO hint at a waning enthusiasm among investors to invest in IPOs?

"I don't think so, as we have seen other IPOs getting subscribed very well, and the response was very good. I think the primary market would continue to remain healthy and buzzing and see no major risks," emphasised Solanki.

Can investors know the future of IPO ahead of its debut?

Narendra Solanki, Head Fundamental Research - Investment Services, Anand Rathi Shares and Stock Brokers, shared some tips which can help investors recognise IPOs that may not perform well in the market.

• The valuations and overall business outlook in the near term play a significant role as far as listing gains are concerned.
• Companies thatprice their IPOs at reasonable valuations gather much attention from retail investors.
• The overall quality of earnings and balance sheet also impacts the IPO prospects.