Korean car maker Hyundai Motor India's Rs 20,557-crore IPO surpasses LIC's mammoth Rs 20,557-crore IPO in May 2022 and will rewrite the record books as India's largest-ever public issue. But large sizes and returns usually don't go hand in hand.

Of the 6 mega IPOs worth at least Rs 10,000 crore that have taken place on Dalal Street so far, 5 generated negative returns upon listing. Additionally, IPO investors who held on to the stock in hopes of a turnaround are still sitting on losses, according to data from Prime Database.

LIC's IPO in May 2022, which was subscribed twice, resulted in a loss of 8% on the trading day. Paytm's Rs 18,300-crore IPO, which was also the biggest problem at the time, lost over 27% of its value on the trading day. Paytm IPO investors are already suffering massive losses.

General Insurance Corporation's Rs 11,257-crore IPO resulted in a loss of 4.5% when it listed in October 2017. IPO investors have yet to get their money back.

Likewise, the IPOs of SBI Cards and Reliance Power – both worth over Rs 10,000 crore – proved to be wealth destroyers.

Coal India's IPO for Rs 15,199 crore is the only exception in this list, which made a whopping gain of around 40% on the trading day and traded around 96% above its offer price. Among other major IPOs was The New India Assurance Co's Rs 9,586 crore IPO. The issue also lost 9% of its value on the listing day in November 2017. The stock traded around 49% below its IPO offering price. Of the ten largest IPOs in India's history, six posted negative returns on the listing day and seven of them earned the label of 'losers' even a year after listing.

Will history repeat itself with Hyundai's IPO?

As the Hyundai IPO opens for subscription from Tuesday, at least 12 brokerage firms have issued subscription ratings as they expect stable growth prospects amid industry tailwinds, robust financials and a healthy SUV lineup.

“We expect limited upside in this IPO but expect HMIL to deliver healthy double-digit portfolio returns in the medium to long term,” said Shashank Kanodia, analyst at ICICI Direct.

If we attribute the FY25 annualized super earnings to the fully diluted post-IPO paid-up equity, the offer price is at a P/E ratio of 26.73 and based on FY24 earnings, the P/E ratio is at 26.28.

“The issue appears to be relatively fully priced, but the company has good prospects after completing its ongoing expansions,” Bajaj Broking said.

While large IPOs usually signal market spikes, as was seen after the Paytm and LIC IPOs, the market has already witnessed a correction.

“Exuberance and euphoria usually lead to a market top. Fortunately, the recent correction has somewhat curbed the euphoric momentum of this bull market. Markets appear ready to absorb the paper offering from the largest-ever IPO in the history of Indian capital markets,” said Jimeet Modi of Samco Securities.

(Disclaimer: Recommendations, suggestions, views and opinions expressed by experts are their own. These do not reflect the views of The Economic Times)