Value investing and swing trading(money markets academy)

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bought all of this

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To those who became long term Hyundai investors today
Are you buying more at the current price. Averaging sort of 😂
Because it is a great company isn't it?
The promoters still have a mini ofs left in their pocket , I expect it's price to reach 1600 in a few months.
What are others take on it , who dint apply ? Should you buy?

ki kis ko ipo Mila ,

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A lot of you are excited about the biggest IPO in India till date. Biggest IPO also means higher chances of allotment.

But is that all?

This IPO has a lot of red flags that cannot be ignored.

First red flag is that issue is 0% fresh issue and 100% offer for sale.

Means that none of the IPO money goes to the Indian arm of the company.

Yes, you read it right. The money goes to the South Korean promoters which effectively means that promoters are reducing their holdings. Or they want to mint money from the IPO frenzy in India.

This brings us to the second red flag. After the issue, the shareholding changes from 100% promoter holding to 82.5% promoter holding. But wait that's not it.

According to the amendment to the Securities Contracts Regulation Rules by SEBI in 2010, promoters of listed Indian companies (other than PSU companies) holding more than 75% had to compulsorily sell their additional holdings to bring it down to maximum 75%.

This means that, 7.5% more promoter holding has to be reduced within 3 years of listing. What does this bring us to?

A 7.5% OFS in the next 3 years which might cause the share price to drop even more

Third red flag is the low cash reserves in the company and even worse, increase in dividend payout to the parent company by taking money out of cash reserves. AFTER THE IPO! Wait what!? So this also means we cannot expect the company to issue a fair amount of dividends!

Fourth red flag is that the grey market premium (GMP) is tanking badly and is at a miniscule Rs. 65/share. Remember that the share price will fall further due to selling that happens after the listing.

Some positives are low debt, the car sales number in India and their market share but valuation is equally important if not more.

Which is why it would be wise to wait for the right valuation to enter for the long-term.

AVOID applying for Hyundai IPO

Reasons: 🔸 It is 100% OFS. Means offer for sale. Not a single money goes to company. All money from our pocket is going to promoter's pocket. And that too in Korea. So this is big loot of India.

🔸 Exorbitant rise in dividend payout to the parent by taking money out of cash reserves, just before IPO. Look like captain is jumping out of ship before others🙄

🔸 Sharp increase in royalty payment percentage to the parent, also just before IPO.

🔸 Launching IPO with full of face component at Big Bull market valuations, while automotive market is struggling.

🔸 Over valued IPO.

🔸 Hyundai sale is decreasing by 5% in July.

🔸 Pear companies are undervalued and with lower P/E ratio like Tata Motors.

🔸 This is historically big IPO, so supplies huge. So slow chance of listing gain.

🔸 It may fall sharp after listing.

🔸 Grey market premium is falling dramatically. Still going down.

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