India's biggest IPO slips below issue price. What's dragging Hyundai?
What's the story
Hyundai Motor India Ltd's shares have witnessed a major decline, falling another 2.59% today. The stock has been on a downward trajectory, declining in six of the last seven trading sessions. With this latest fall, Hyundai's shares are now trading below their issue price of ₹1,960. The decline comes after the company's record-breaking initial public offering (IPO) in October 2024, which raised over ₹27,000 crore.
Market performance
March decline exceeds 19%
The month of March has been particularly bad for Hyundai's shares, with a decline of over 19%. This is the worst performance since its listing. The company's IPO was India's largest ever and was fully subscribed during its three-day bidding period. However, the retail portion remained undersubscribed amid the current market conditions.
Supply chain issues
US-Iran conflict pushes aluminum prices higher
The ongoing US-Iran war has caused major supply chain disruptions, affecting several sectors including automobiles. Steel, which accounts for 50-55% of the overall costs in the auto sector, has remained stable. However, aluminum prices have skyrocketed due to fears of supply disruptions from Iran's attacks on key production facilities in West Asia.
Cost increases
Hyundai faces higher import related costs
Freight, which accounts for 3-5% of overall costs in the auto sector, has also seen an increase. Insurance premium costs have gone up as well. Further, currency depreciation has added to US dollar-denominated costs, making it more expensive for companies like Hyundai to import materials and components needed for their vehicles.
Scenario
Technicals show Hyundai stock oversold
Hyundai's shares are currently trading below key moving averages, indicating a bearish trend. The Relative Strength Index (RSI) on the charts is now at 24, which indicates that the stock is "oversold." An RSI reading below 30 typically indicates that a stock has been oversold. Shares of Hyundai Motor India are trading 2.59% lower at ₹1,769.70.