Hyundai Motor India gets flood of bullish calls amid its weak debut

Analysts are rushing to recommend investors buy shares of Hyundai Motor India Ltd., a much-needed show of support after the stock’s disappointing trading debut Tuesday.

The local unit of the Korean automaker now has a total of six positive recommendations, from Nomura Holdings Inc. and Macquarie Group Ltd. along with local brokers including Motilal Oswal Securities Ltd. It’s received just one sell-equivalent rating so far, from Emkay Global Financial Services Ltd., and no holds.

Bullish analysts are citing robust growth prospects for India’s second-largest automaker. Its shares climbed as much as 6 per cent on Wednesday, rebounding after their opening-day loss of 7.2 per cent.

Hyundai Motor Co. raised about $3.3 billion in what was India’s largest-ever initial public offering. The stock debuted to a cooling Mumbai market as investor focus shifts to China’s stimulus drive.

The IPO saw tepid demand from small investors who were turned off by the parent company getting all of the deal proceeds. The unit’s share sale also met with concerns over slowing growth in India’s passenger vehicle market.

The average price target forecasts a 13 per cent gain in the stock over the next 12 months compared with the IPO price. Hyundai India is “well-positioned to reach greater heights,” Motilal Oswal analysts Aniket Mhatre and Amber Shukla wrote in a note.

The company should benefit from increased penetration of automobiles in the world’s fastest growing large economy as well as customers’ willingness to pay more for attractive designs and better features. Nomura says these factors should lead to 3-5 per cent annual growth in average selling prices for carmakers.