(Bloomberg) -- Shares of Hyundai Motor India Ltd. slipped almost 6% early in their Mumbai debut on Tuesday, a tepid start to trading for what was the South Asian nation’s largest-ever initial public offering.

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The stock traded as low as 1,844.65 rupees after it was priced at 1,960 rupees, the top of the marketed range. South Korea’s Hyundai Motor Co. sold a 17.5% stake in its Indian unit via the IPO, seeking to benefit from the investor frenzy for share sales in India, one of the world’s most vibrant venues for listings this year.

Ahead of the $3.3 billion listing of India’s second-largest carmaker by sales, some analysts had flagged concerns about the priciness of the deal. Bloomberg Intelligence analyst Joanna Chen noted that its valuation was about five times its Korean parent’s, though in line with those of Indian peers such as Maruti Suzuki India Ltd.

Hyundai’s decline stands out given that new listings in India have seen shares rise by an average of 39% in their first trading day this year, according to data compiled by Bloomberg. Still, some larger IPOs including Life Insurance Corp. of India and One 97 Communications Ltd. also fared poorly in their debuts.

Hyundai’s deal saw strong demand from institutions, which flooded in on the last day of sale. Retail investors, however, only bought about half the portion that had been reserved for them in the IPO.

Individual traders were turned off by the parent company getting all of the IPO proceeds as well as cooling demand in India’s auto industry, analysts have said.

‘Long-Term Value’

India’s emergence as the world’s fastest-growing major economy as well as its expanding middle class present an opportunity for automakers. The nation’s car market is on track to reach 20 million units by 2047, Suzuki Motor Corp. Executive Vice President Kenichi Ayukawa said in an interview in July. A total of 4.2 million passenger vehicles were sold in India in the fiscal year ended in March, according to the Society of Indian Automobile Manufacturers.

“Hyundai Motor India’s IPO offers potential long-term value, but it is not suited for investors seeking quick gains,” Devi Subhakesan, an analyst at Investory Pte, wrote in a note on Smartkarma ahead of the debut. “Valuation risks are expected” amid shifting consumer preferences and rising competition in India’s auto industry.

Hyundai has established a strong franchise in India but a lack of major launches over the next 12-18 months and higher royalty payments to the parent are among factors that will restrict the company’s earnings growth, analysts at Emkay Global Financial Services Ltd. wrote in a note, initiating coverage with a reduce rating.

Nomura Holdings Inc., in contast, initiated coverage with a buy rating ahead of the listing, citing expectations for “healthy” volume growth and vehicle price increases. It set a price target of 2,472 rupees, implying potential upside of about 26% over the IPO price.

With Hyundai’s proceeds, Indian IPOs have raised more than $12 billion so far this year, eclipsing volumes for the past two years but still below the record $17.8 billion raised in 2021, according to data compiled by Bloomberg. Other pending debuts include food-delivery company Swiggy Ltd. and the renewable-energy arm of state-run power producer NTPC Ltd.

Around 20 companies from Asia Pacific are listing shares this week in deals that may raise more than $8 billion, the biggest weekly volume since April 2022, according to data compiled by Bloomberg. Shares of Japan’s Tokyo Metro Co. are scheduled to start trading on Wednesday after a $2.3 billion offering.

--With assistance from Chiranjivi Chakraborty.

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