Hyundai Motor India is poised to make history with the launch of its highly anticipated Initial Public Offering (IPO), which will be the largest-ever public issue in India. The IPO, valued at ₹27,870 crore (approximately $3.3 billion), will be open for bidding from October 15 to October 17, 2024. With a price band set between ₹1,865 and ₹1,960 per share, investors are already eyeing this opportunity closely. The offering consists entirely of an Offer for Sale (OFS) by Hyundai Motor Company, the South Korean parent of Hyundai Motor India, meaning that Hyundai India will not receive any direct proceeds from the sale of these shares. This strategy will result in a reduction of Hyundai Motor Company’s ownership stake in its Indian subsidiary from 100% to approximately 82.5%.
For retail investors, the minimum application consists of 7 shares, which requires an investment of ₹13,720, while the maximum allocation per investor is capped at ₹192,080. High-net-worth individuals (HNIs) can place larger bids, and institutional investors are also expected to participate heavily, given the scale of the IPO. In the grey market, Hyundai’s shares are currently commanding a premium of ₹75, which implies a potential listing price of around ₹2,035 per share—a 3.83% gain over the issue price. However, the Grey Market Premium (GMP) has fluctuated, and prospective investors should keep an eye on market conditions as the listing date approaches on October 22, 2024.
Hyundai Motor India is a significant player in the country’s automotive sector, consistently competing with domestic brands like Tata Motors, Maruti Suzuki, and Mahindra & Mahindra. It has cemented its position as the second-largest car manufacturer in India, leveraging its extensive manufacturing capabilities. The company’s main production facility, located near Chennai, has an annual production capacity of over 800,000 vehicles. Hyundai India’s product portfolio includes popular models like the Grand i10 Nios, Creta, Verna, and the electric IONIQ 5. Additionally, it exports vehicles to markets in Africa, the Middle East, and South Asia, making India a crucial hub for the company’s global operations.
Financially, Hyundai Motor India has demonstrated impressive growth over recent years. In FY23, the company reported a profit after tax (PAT) of ₹4,709 crore, representing a 29% year-on-year increase. Revenue for the year also grew by 16%, reaching ₹60,307 crore, reflecting the strong demand for Hyundai’s vehicles both domestically and internationally. With the expansion of its product line-up and plans for further investments in the electric vehicle (EV) segment, the company is well-positioned for sustained growth in the Indian market.
However, it’s important to note that Hyundai Motor India will not receive any funds from this IPO, as the proceeds will go directly to Hyundai Motor Company as part of its divestment plan. Despite this, analysts believe the IPO offers a solid investment opportunity due to the company’s consistent financial performance and expansion prospects, particularly in the growing EV market. The company is also planning to increase its production capacity and expand its dealership network across India, ensuring that it remains competitive in a rapidly evolving auto industry.
Investment experts are largely optimistic about Hyundai’s IPO, with many viewing it as a medium to long-term investment opportunity, particularly for those looking to capitalize on the company’s continued growth and dominance in the Indian auto market. Given Hyundai’s significant market share, strong financials, and strategic plans, the IPO is expected to attract widespread attention from retail and institutional investors alike. Investors should, however, remain mindful of market volatility, particularly as geopolitical tensions and fluctuations in the domestic equity market have already impacted the Grey Market Premium in the lead-up to the IPO.
