Hyundai Motor India IPO: An Overview
Contents
- 1 Hyundai Motor India IPO: An Overview
- 2 Background: Hyundai Motor India’s Legacy
- 3 Key IPO Details
- 4 Objective of the IPO
- 5 Financial Performance of Hyundai Motor India
- 6 Growth Prospects and Industry Outlook
- 7 IPO Subscription and Allotment
- 8 Lead Managers
- 9 Investment Considerations
- 10 Conclusion
- 11 Spread your love
Hyundai Motor India, one of the largest car manufacturers in India, is making waves in the stock market with its highly anticipated Initial Public Offering (IPO). Valued at a staggering ₹27,870 crore, this IPO is one of the largest in Indian history, surpassing previous major offerings such as LIC’s and highlighting Hyundai’s significance in the Indian automotive market. Scheduled to open between October 15 and October 17, 2024, the IPO is expected to generate widespread interest among retail and institutional investors alike.
This comprehensive guide provides full details about Hyundai Motor India’s IPO, from its background and structure to financial performance, growth prospects, and investment considerations.
Background: Hyundai Motor India’s Legacy
Hyundai Motor India Ltd. (HMIL) is the second-largest passenger vehicle manufacturer in India, trailing only Maruti Suzuki. Established in 1996, the company quickly established itself as a key player in the Indian automobile market, benefiting from its parent company’s vast global experience. Hyundai Motor Company, the parent company, is the third-largest automobile manufacturer globally, and Hyundai India plays a vital role in the company’s international portfolio.
Hyundai India has consistently grown its market share by introducing popular models like the Santro, Creta, Venue, and the i20, as well as expanding its focus on the electric vehicle (EV) segment. With an extensive product line, state-of-the-art manufacturing facilities, and a growing dealer network, the company is well-positioned for future growth.
Key IPO Details
The Hyundai Motor India IPO will be a 100% Offer for Sale (OFS), meaning the proceeds will go to existing shareholders, particularly Hyundai Motor Company, which is reducing its stake from 100% to around 82.50% post-listing.
Important Dates:
- IPO Open Date: October 15, 2024
- IPO Close Date: October 17, 2024
- Allotment Date: October 18, 2024
- Refund Date: October 21, 2024
- Demat Transfer: October 21, 2024
- Listing Date: October 22, 2024
Issue Size:
- Total IPO Size: ₹27,870 crore
- Offer for Sale (OFS): 14.22 crore shares, aggregating to the full IPO size of ₹27,870 crore.
- Fresh Issue: There will be no fresh issue of shares.
Price Band:
- ₹1,865 to ₹1,960 per share
Lot Size:
| Application | Lots | Shares | Amount |
|---|---|---|---|
| Retail (Min) | 1 | 7 | ₹13,720 |
| Retail (Max) | 14 | 98 | ₹192,080 |
| S-HNI (Min) | 15 | 105 | ₹205,800 |
| S-HNI (Max) | 72 | 504 | ₹987,840 |
| B-HNI (Min) | 73 | 511 | ₹1,001,560 |
Grey Market Premium (GMP):
As of the current GMP, Hyundai shares are expected to list at a price of around ₹2,035 per share, reflecting a premium of ₹75 over the higher end of the price band, offering a potential gain of 3.83%.
Objective of the IPO
The primary goal of the IPO is to enable Hyundai Motor Company to partially offload its shareholding in Hyundai Motor India. Since it is an Offer for Sale (OFS), the funds raised will not go into the company but rather into the hands of existing shareholders. This type of IPO provides an exit route for the promoters without diluting the company’s capital base.
No new capital will be raised to fund business expansion or reduce debt; however, this move will help Hyundai Motor Company retain significant control of the Indian arm, as it will continue to hold 82.50% of the company even after the sale.
Financial Performance of Hyundai Motor India
Hyundai Motor India has demonstrated robust financial performance over the last few fiscal years, despite the highly competitive automotive sector and economic disruptions caused by the pandemic.
- Revenue: Hyundai’s revenue has shown consistent growth, rising from ₹47,378 crore in FY2022 to ₹69,829 crore in FY2024.
- Profit After Tax (PAT): Hyundai’s profitability has surged, with profits increasing from ₹2,901 crore in FY2022 to ₹6,060 crore in FY2024.
- EBIT: Earnings before interest and tax (EBIT) have similarly grown, from ₹3,316 crore in FY2022 to ₹6,924 crore in FY2024.
- Return on Equity (RoE): One of the standout metrics for Hyundai is its impressive RoE, which grew to 56.82% in FY2024, reflecting its efficient capital usage.
Hyundai’s balance sheet remains strong, with a net worth of ₹10,665 crore in FY2024 and manageable debt of ₹768 crore. These figures suggest that the company has a solid financial foundation to support its growth trajectory.
Growth Prospects and Industry Outlook
The automotive sector in India is experiencing rapid changes, especially with the transition towards electric vehicles (EVs) and hybrid models. Hyundai Motor India has been proactive in launching electric models like the Hyundai Kona and Hyundai Ioniq 5, positioning itself well for the future of mobility.
With the government’s push for cleaner technologies and an increased focus on reducing carbon emissions, Hyundai’s early investments in EV technology and manufacturing are expected to pay dividends in the coming years. The company plans to introduce more affordable EV models aimed at mass-market consumers, which should bolster its market share.
Further, India’s middle class is expanding, and demand for personal vehicles remains strong. Hyundai’s brand recognition, established dealer network, and diverse product offerings will allow it to capitalize on these trends.
IPO Subscription and Allotment
The IPO has already attracted substantial interest from anchor investors, with Hyundai raising ₹8,315 crore through the anchor allotment of 42.42 million shares. Anchor investors include prominent names in the financial industry, and their participation signals strong institutional confidence in Hyundai Motor India’s future performance.
During the subscription period, investors can place bids for shares. The allotment is expected to be finalized on October 18, 2024, and shares will be transferred to successful bidders by October 21, 2024.
Lead Managers
The IPO is managed by a consortium of top investment banks, which include:
- Kotak Mahindra Capital Company Ltd
- Citigroup Global Markets India Private Ltd
- HSBC Securities and Capital Markets (India) Private Ltd
- J.P. Morgan India Private Ltd
- Morgan Stanley India Company Private Ltd
These firms bring extensive experience in managing large IPOs, adding credibility and facilitating smooth execution for the Hyundai Motor India listing.
Investment Considerations
- Strong Market Position: Hyundai Motor India has a dominant presence in the Indian market, ranking second in passenger vehicle sales. It has a diverse product range, including compact cars, SUVs, and electric vehicles, making it well-equipped to cater to a broad customer base.
- Growing EV Market: Hyundai’s early entry into the EV market positions it favorably as consumer preferences shift towards sustainable transportation options. With the introduction of new EV models, the company is poised for growth in this rapidly expanding segment.
- Competitive Risks: Hyundai faces fierce competition from domestic players like Maruti Suzuki, Tata Motors, and Mahindra & Mahindra, as well as global competitors expanding in India. Maintaining market share in such a competitive environment will require continued innovation and strong execution.
- Valuation: With a price band of ₹1,865 to ₹1,960 per share, the IPO values the company at a premium relative to some of its peers. However, the company’s financial performance and growth prospects justify this valuation for long-term investors.
- Grey Market Premium (GMP): The current GMP indicates that shares may list at a premium of ₹75, which offers modest short-term gains for investors looking for a listing pop. However, GMP fluctuations should not be the sole determinant for investment decisions.
Conclusion
Hyundai Motor India’s IPO presents a unique opportunity for investors to participate in the growth of one of India’s leading automobile manufacturers. With a strong financial track record, a growing focus on electric vehicles, and substantial market share, Hyundai is well-positioned for future success. However, the competitive landscape and high valuation warrant careful consideration, particularly for retail investors.
Given the current market sentiment and institutional interest, Hyundai Motor India’s IPO is expected to attract significant attention from both retail and institutional investors.