Samir Arora's take on Korean promoters, after Hyundai Motor India’s poor Q2 show

Hyundai Motor India shared its earnings report for the quarter ended September, making a 16 percent fall in net profit to Rs 1,375 crore.

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Veteran investor and founder of Helios Capital, Samir Arora shared a cheeky take, probably on the recently-listed Hyundai Motor India's results, which came in under expectations, without naming the company. In a post on social media platform X, Arora wrote, "Yeh Koreans to Indian promoters ke bhi baap nikle."

Arora’s remark is a telling commentary on the notorious practice of selling the story of exaggerated growth prospects which helps companies command high valuation during the IPO, but sets investors for disappointment when growth does not pan out as projected.

At 11.10 am, shares of Hyundai Motor India were quoting Rs 1,720.2 per share, lower by 4.7 percent on the NSE.

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The Huyndai IPO was priced at a P/E of 27x, which was on par with its nearest rival and leader in the passenger car segment Maruti Suzuki. Although the long term prospects for Hyundai, analysts reckon, are strong, the growth in the near term is proving to be a challenge.

Further, the valuation for the Indian arm of the auto firm is higher than Korean parent's. The P/E ratio for Hyundai Motor India is at 27x, while that of parent Hyundai Motor Company is at 5x.

Retail investors chose not to buy into the Hyundai Motor India IPO, instead they took a step back, subscribing for only half their portion allocated. As a result, QIBs, who oversubscribed for their portion by almost seven times, were given a higher allocation, which is more than some bet for.

One of the key reasons behind this is that the IPO was a complete offer-for-sale, allowing the Korean promoters to cash in at the best price. From its issue price of Rs 1,960 per share, Hyundai Motor India shares are down over 12 percent.

On November 12, Hyundai Motor India shared its earnings report for the quarter ended September, making a 16 percent fall in net profit to Rs 1,375 crore.  The fall came due to lower domestic sales, geopolitical factors and exports, its first earnings report since listing. The 'Creta' SUV manufacturer had reported consolidated net profit of Rs 1,628 crore in the year-ago period.

The South Korean auto major stated that its Q2FY25 consolidated revenue from operations declined 7.5 percent to Rs 17,260 crore as against Rs 18,660 crore in Q2FY24.

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